Kolosus settle Seton claim16 May 2003
Kolosus Holdings have removed a major threat to the group's viability by agreeing to settle a $6 million dispute with US-owned rivals, Seton Company. The uncertainty caused by the seven-year-old dispute, dating back to a joint venture operation in Ladysmith, KwaZulu-Natal in the 1990s, has adversely affected Kolosus business. The settlement is being funded through German investor Claas Daun, effectively the group's banker, who has taken over all their debt from a consortium of four banks. Seton have agreed to accept $5 million in cash and a shareholding of just under 25% in Kolosus. Daun has granted Seton an option on the shares which can be exercised at any time for $1 million. Subject to approval by the Competition Board, Daun will acquire the 63% shareholding in Kolosus from Senwes for one rand. Together with the 27% of Kolosus he acquired from Absa for 31c, this gives Daun a 90% holding in Kolosus. Agreed terms mean that Seton and Kolosus will terminate all actions and claims against each other, and against the liquidators of Silveroak, the company at the centre of their dispute. This includes the liquidator abandoning a Transvaal High Court judgment in February, which inter alia ordered Kolosus to pay R88.5 million to the Silveroak liquidator. Managing director Anton Bischof said he was delighted at these developments, as they lifted a cloud which had been hanging over Kolosus: 'With this threat to our viability removed, Kolosus will be able to normalise trading relationships which were affected by uncertainty in the minds of clients and suppliers. 'Trading conditions for the group are still difficult, and it will take time for these positive influences to take effect. However, we see a definite long-term benefit.' Kolosus issued a profit warning last month, stating that the stronger rand and the drop in meat prices meant it would make a loss for the financial year which ended April 30, 2003. The cautionary notice to shareholders was renewed until further announcements are made that settlement conditions have been fulfilled.