After a failed attempt to buy time in order to keep a whole array of creditors at bay, directors of Bluthorn Fund Managers have run out of tricks but the company hardly has two coins to rub together.
On 13 January 2022, Justice Michael Leburu of Gaborone High Court placed the troubled asset management firm Bluthorn Fund Managers (BFM) in liquidation. However, an investigation by The Business Weekly & Review suggests that since the funds were squandered, the value of Bluthorn assets cannot raise the P200 million due to creditors.
Companies in which Bluthorn had also invested in have a combined asset value insufficient to cover its P223 million debt. Bluthorn had invested in a company called De Beef (Pty) Ltd. According to an affidavit of Mosimane filed before court, De Beer owes Bluthorn P26 432 043. The company was contracted by the government to supply fertiliser to farmers in Kanye under the ISPAAD programme. In his affidavit, Mosimane said the company supplied fertiliser worth P3.5 million and it is yet to be paid by the Ministry of Agriculture while it is yet to deliver more fertiliser worth P3 million. “The company is unable to start repayment to Bluthorn due to government’s late payment,” Mosimane wrote, adding that De Beef has plant valued at P10 million and a further P3 million in stock.
So in essence, De Beef has a plant valued at P10 million, an outstanding payment of P3 million and stock valued at P3 million. Assuming that all this is recovered, only P16 million may be raised, assuming that the value of the plant has not deteriorated.
Further, Bluthorn gave out a loan of P6 031 345 with clients’ money to a company called Quali-Packaging (Pty). Mosimane wrote in his affidavit that after the government banned importation of bottled water in 2018, the company sought to procure machinery and plant to produce bottled water locally. “The plant valued at P5.7 million was purchased but could not be cleared at Customs after NBFIRA pounced on Bluthorn,” he said. “If the plant is still in god condition, it is possible that P5.7 million may be recovered, but the value of the plant, which is over 1 year old, has possibly declined.”
CMK Prospects was also loaned money by Bluthorn amounting to P12 881 578 for procurement of over 20 000 digital set top boxes after the government facilitated CMK’s purchasing of the sets in partnership with the Japanese Ambassador. According to Mosimane’s affidavit, it was around 2018 when the government decided to migrate its television services from analogue to digital. Plans were later postponed to after elections but the money has since disappeared.
Mosimane also stated that Thompson Medical Supplies (Pty) Ltd was financed with P11 838 640 to supply medical equipment to Bokamoso Private Hospital and Sidilega Private Hospital. Mosimane said there was delay caused by completion of Sidilega, adding that repayment of the loans would soon commence. Chances of this money being recovered are high. Further, Securus (Pty) Ltd, a civil construction company, was loaned P20 334 231 for the sub-construction of a road from Jwaneng Circle into Debswana Mine. The project is only 80 percent complete but there is no further funding.
Hard Rock (Pty) Ltd, which owes Bluthorn P2 464 092, is said to be awaiting a P2.8 million payment for the completed construction of a road from Moshana quarry to the main Kgotla in that village. This money will possibly be recovered. According to Mosimane, these were sound investments and efforts are being made to recover the money against an expert’s conclusion that the loans are unrecoverable.
At the most, Bluthorn may recover only around P30 million, considering the value of its assets. Perusal of a Trading Update, Business and Capital Restructuring document authored by Joseph Mosimane, the CEO of the Bluthorn, reveals that Bluthorn’s game plan was to actually ‘buy time’ through a request to be allowed to restructure by the Non-Bank Financial Institutions Regulatory Authority (NBFIRA).
In the confidential document that Mosimane authored strictly for the eyes of NBIFIRA officials, he proposed to review NBFIRA business model and internal management structures and inter-company relationships with its related companies in which millions in cash were channelled. The money, running into millions of pula, was found to have benefitted Eugene Engelbrecht, Kelebogile Sibisibi and Henk J. van der Merwe who jointly own all the shares in the real holding company, B Thorn (Pty) Ltd, which owns the majority of shares in Bluthorn Fund Managers. In its operations, Bluthorn Fund Managers (BFM) was found to have used a network of five primarily related parties in the BFM ‘family’ of companies. They are BluThorn Fund Managers (Pty) Ltd, BluThorn Procurement (Pty) Ltd, B Thorn (Pty) Ltd, BluThorn Holdings (Pty) Ltd and Prime Employee Benefits (Pty) Ltd.
In his proposal, Mosimane sought permission to restructure this internal conflict of interest. The proposal was aimed at convincing NBFIRA to reconsider its decision to liquidate Bluthorn. Another part of Bluthorn’s failed game plan was to engage with its creditors concerning an extension of the period of payment. Bluthorn was supposed to have paid P96 million to some of its investors, money that all matured between January and March 2020. Since the money was squandered, Bluthorn’s plan was to buy time by extending the duration of payment by 12 to 24 months.
This proposed ‘capital restructuring’ was premised on the hope that it would increase focus and monitoring of investments and their performance by eliminating the need to find additional funding or new investments. BFM also proposed the sale of shares and interests held in third party companies.
Further, the BFM Board had decided to approach local and international financial institutions to finance some of its cash-strapped third party investments. The board also wanted to approach CEDA to finance some of its third party SMME investments in order to restructure their capital base.
Subsequent to considering the proposal made by Bluthorn, NBFIRA chose to proceed with the liquidation of the company in order to dispose of available assets of the company so as to return creditors’ money. A perusal of the available documentation shows that current Bluthorn assets fall short of the P223 million it owes to creditors