The expected Court battle between Guma Tac & the Golden Lions Rugby Union is underway, with an Application for Liquidation launched in the South Gauteng High Court.
The Golden Lions are hopelessly bankrupt, according to a report in possession of The New Age.
The New Age
Ellis Park Stadium, home of the reigning Currie Cup champions, is more than R70m in the red.
The official figures outlining the sorry state of the financial affairs show the total amount owed to debtors in fact exceed the hundreds of millions of rands of assets on the books of the Golden Lions Rugby Union (GLRU).
Deon van der Walt, corporate finance executive of IT billionaire, Robert Gumede’s, Guma Group said in papers filed in the South Gauteng High Court that GLRU are “hopelessly insolvent, both factually and commercially”.
In the liquidation application of the Golden Lions, Van der Walt said Gumede and Ivor Ichikowitz provided more than R10m for Lions president Kevin de Klerk to pay the Lions rugby players and his staff salaries in December 2010 and January last year.
Guma TAC, consisting of Gumede’s Guma Group and Ivor Ichikowitz’s Transafrica Capital, was announced in October 2010 as the Lions new equity partner, but the short-lived marriage ended abruptly when Gumede pulled the plug last year. The two businessmen then claimed that the GLRU only wanted their money, but was not interested in their plans for meaningful transformation. They accused the Lions’ bosses of being “stuck in the past” not wanting to move to a new future.
According to Van der Walt’s statement, Guma TAC made it possible for the Lions to become the 2011 Currie Cup champions. As part of the agreement for 49% shares in the rugby union, R171000 was paid as part of the salary for the New Zealand conditioning coach, Wayne Taylor.
“By June 2010 when the applicants (Guma TAC) started negotiations, the Golden Lions had lost all their 2010 Super Rugby games and all their matches in the less competitive domestic Currie Cup competition up to that date,” Van der Walt said.
“The applicants’ funding allowed the Lions to pay for the salaries of the players, coaches and staff, to buy international and local players and employ other value adding staff to improve the team’s performance culminating in them winning the Currie Cup in 2011.”
Referring to the poor state of financial affairs, the Lions’ auditors, PricewaterhouseCoopers wrote in May 2010 that the ability of the company to continue as a going concern depended on the ability to return to profitability.
Van der Walt included the financial figures for the 2007 to 2010 financial years describing it as a “dramatic and continuing decline in the factual solvency”.