Vertically integrated steel and vanadium slag producer Evraz Highveld Steel and Vanadium has launched a High Court application against financial services provider Sasfin Bank.
The JSE-listed company on Monday said that, in the application, which was submitted to the court on May 22, the company’s appointed business rescue practitioners (BRPs) asked for the release of the debtors ceded to Sasfin to enable the BRPs to procure funding from the Industrial Development Corporation (IDC).
The dispute related to an invoice discounting agreement, terminated by Sasfin when Evraz Highveld’s business rescue proceedings started on April 13.
Evraz Highveld disputed that Sasfin was entitled to retain the debtors’ book of Evraz Highveld after having collected all the capital and interest outstanding on the facility.
In addition, it said Sasfin had imposed R36-million in penalties arising from the cancellation of the agreement and had retained R35-million collected from the debtors.
The steel producer tendered to pay, under protest, the outstanding amount claimed of less than R1-million, as this amount was reflected on the latest Sasfin statement, provided that Sasfin released the cession of debtors.
“That tender was refused by Sasfin and has resulted in the urgent application being launched,” the company said in a statement.
Evraz Highveld would also institute separate legal action against Sasfin to set aside the purported penaties and recover the amounts concerned.
“These actions have severely compromised our ability to access the cash flow required to save the business and have potentially prejudiced the conclusion of a loan arrangement with the IDC, which requires us to first procure the unconditional release of the cession of debtors,” the steel producer said.
Sasfin was required to respond to the application by 17:00 on Monday and the case would be heard on Thursday.
Sasfin told Engineering News Online that the matter was sub judice and that it was unable to respond to media enquiries in detail.
"Attorneys have been instructed and we are taking legal advice in connection with the Evraz application," it said.