EPRU’s mystery R80m lifeline

Unnamed sponsor steps in to save franchise from final liquidation

AN R80-MILLION cash injection promised to the Eastern Province Rugby Union (EPRU) by a mystery sponsor saved the beleaguered franchise from final liquidation yesterday.

But as EPRU was given another lifeline, with the court proceedings postponed to May 31 for it to apply for business rescue, role-players were tight-lipped about where the money was coming from.

In asking the Port Elizabeth High Court for a three-week indulgence to file papers for business rescue, EP Kings boss Cheeky Watson said R20-million had already been secured from the investor as a “token of good faith”.

Watson said in an affidavit that EPRU’s administrator, the SA Rugby Union (Saru), had secured a prospective investor who was willing to grant post-commencement finance to EPRU in terms of Section 135 of the Companies Act.

He said of these funds, R20-million had already been paid into the bank account of EPRU’s attorney, Paul Bester, with the rest to be paid over the remainder of the Super Rugby season.

Thirty-six professional players took EPRU to court, claiming they were owed more than R18-million in salary arrears and other benefits.

They wanted the union to be wound up and a liquidator appointed so its debts could be settled.

While lawyer Craig Jessop, who appeared for some of the players, eventually agreed to the postponement, he remained sceptical.

“While the players welcome the investment as a positive development, they still have no idea as to what the business plans are,” Jessop said.

“Keep in mind that if the application for business rescue is nothing more than a damp squib and simply going to prolong the agony, then there will be no point.”

In March, the court placed EPRU under provisional liquidation with an opportunity to come up with the funds before yesterday, or face final liquidation.

However, Watson said yesterday that EPRU had changed course, with plans now under way for business rescue. “The deposit [of R20-million] was secured after intense negotiations during the course of last week and consultations between Mr Bester, Saru and the investor,” Watson said.

“As a token of good faith, and through the facilitation of Saru, the R20-million was paid into the trust account to be incorporated into a rescue plan.”

He said the money was not only available to pay creditors, but also as post-commencement finance to rescue the company.

“There are several conditions attached to the payment of the funds which will eventually crystallise in a plan to be presented,” he said.

“Such conditions are complex and consist of sponsorship deals, obtaining shareholding and concluding several other agreements, which is the incorporation of the [Kings] franchise into the [EPRU].” Watson said the alternative to a postponement – EPRU being finally liquidated – would be devastating to the province.

“With the final liquidation thereof, all administrative functions of rugby in the Eastern Cape will cease, alternatively they will have to fall back into the hands of the union as administered by Saru,” he said.

“This is an enormous task to immediately, and during a season, simply start up the operating machinery.”

Watson said the liquidation of EPRU would also affect the rugby union’s revenue stream negatively as its only present source of income was in respect of TV rights.

Jessop said a number of the players were frustrated by the process.

“There seems to be a knee-jerk reaction and late response to court dates, and that – [compounded by] a string of broken promises – has left the players a bit disillusioned,” he said.

“But we will approach this with an open mind.”

The papers for business rescue were ordered to be filed before May 24.