A director of bankrupt Lightedge Technologies is sticking to his guns, saying black economic empowerment (BEE) policies were the major reason for the distributor's demise.
David Musikanth says, despite criticism levelled at the firm and the directors that they had not managed the firm correctly, the fact of the matter is that it took too long for it to find a credible BEE partner, even though it had done its best to nurture black staff members.
"About 62% of our staff were black and there was no reason to just close down the company. However, we did leave getting a credible BEE partner too late and even though we were really happy with Red Magic, it was too little too late," he says.
BEE investment firm Red Magic took a 40% stake in December on condition that it brought in R30 million in business over the next two years. However, it did not have to pay anything for the actual stake.
"If there is one thing I have learnt, it is that it is far better to start a company with BEE from the beginning than to try and incorporate it when the company is already mature," Musikanth says.
Close to the wind
Obbey Mabema, Red Magic's marketing director, says his company was not aware of how close to the wind Lightedge was sailing when it came on board.
"The whole issue [around BEE] is very complicated and we were totally unaware that Lightedge was about to implode when we signed on."
Mabema says Red Magic was considering buying Lightedge, but no concrete decision had been made. "We have been exploring ways and means to take it over."
One of Lightedge's creditors filed for liquidation last month and the Cape Town High Court is expected to make this a final order around 26 March, says one of the liquidators, Hans Klopper, of Independent Trustees.
Vultures circling
Klopper says the liquidators, which include Brian Shaw, of Progressive Administrators, and lawyer Nolita Kose, of law firm Mfazi Kose, are still busy with the due diligence and valuation of the company assets.
"The company itself is worth zero. But the assets could be worth around R10 million," he says.
Klopper says there has been some interest from a few companies to buy assets, but not Lightedge itself. "They have been bargain-hunters."
He says all the staff members have already left and seem to have found jobs within the sector.
"They are IT staff and their skills are easily transferable. However, any staff member who has an outstanding claim against Lightedge will be handled as one of the creditors."
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BEE snuffs out Lightedge
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