The Industrial Development Corporation of SA (IDC) has obtained a court order to recoup more than R11m they loaned to radio personality Tbo Touch’s digital radio station Touch HD and Marketing because he has allegedly been mismanaging the funds.
This move threatens to shut down the digital radio station’s operations as its equipment and other assets might have to be auctioned o to realise the amount owed.
The IDC led the papers in the Joburg high court last month demanding that Touch HD return the money they gave them because the company was misusing the funds.
IDC said in the court papers seen by Sunday World that they loaned the station over R6m as a working capital loan and over R270,000 in a business support loan.
They also made available a R7.5m capital expenditure loan for the sole purpose of purchasing plant and machinery for the station.
The station then took a R13m notarial general covering bond which was registered in the deeds registry in Pretoria as security for its debt to the IDC.
The Joburg-based station, which was represented by its sole director Thabo “Tbo Touch” Molefe when it entered into the loan agreement with the IDC, was supposed to repay the capital loan in 30 monthly installments and the business support loan in 36 equal monthly installments.
“The subordinated loan would be repaid based on a cash sweep of 80% of the respondent’s excess capital towards the repayment of the subordinated loan until the subordinated loan has been repaid,” reads the papers.
The IDC complained that although the station had not yet started repaying its loan, Molefe was experiencing cash flow problems and was in arrears with several of its creditors including Boomtown Events, which he allegedly failed to pay for catering for them at a Durban event.
They also said the station breached the agreement when it utilised R2.7m of funds earmarked for capital expenditure without the IDC’s approval and used it towards funding its working capital.
The IDC said when it enquired about the alleged misuse of the money, Molefe confirmed in a letter that they had
used the money to pay staff salaries as they were experiencing cash flow problems.
“As business owner it is imperative that salaries are covered on a monthly basis. As such a business decision was made to utilise the funds to keep the company afloat, without which they would not be a business or the need for capex [capital expenditure] nor the ability for the IDC to recoup their loan,” reads his letter.
He also said the radio station experienced cash flow problems because it was not well received by their potential clients as they directly compared them to traditional free-to-air radios which have a much larger audience base.
But the IDC would not have none of it and asked the court to grant them an order to take possession of the station’s assets.
The order, seen by Sunday World, reads in part: “It’s order that Draft Order marked X signed and dated 27 August 2019, is made an Order of Court.”
By Ngwako Malatji