Reading Time: 2 minutes

Bridge Not Quite Done QuiteYet

In a dramatic comeback from the brink of liquidation and closing their doors a last minute hail Mary pass at keeping Bridge in business has been voted for by shareholders and creditors, keeping the sinking ship slightly afloat for the moment.

Bridge Corporate (owned by the Aldum family), Bridge Credit and Onecor all recently became victims of over promising on returns while repayments on unsecured credit were dropping and the acquisition of easy, over the counter, rubber stamped garnishee orders (EAOs) were drying up.

In the past these firms were promising (and delivering) amazing 19% returns (High, very high, perhaps too high… seemingly pyramid scheme high?) but as payments by debtors dried up so payments dropped to 1% PA leading to a collapse of the entire structure and a need for business rescue and eventually the announcement that liquidation followed. Now in a last minute turn around, creditors have accepted a plan to become preferred shareholders (they get their money from any profits first before everyone else) instead of pursuing liquidation.

New Faces and R40 Million

In typical keeping things ‘in house’ fashion the man appointed to be the interim CEO of Bridge during the business rescue came from working as CFO at a company run by one of the directors of Bridge itself. The business rescue has now been terminated as the company has been deemed to no longer be financially distressed. In a new move though a co-CEO has been appointed, with the new plan, making one of the former creditors – Frans Badenhorst – in charge to help keep an eye on things during the next 4 crucial months as the company downsizes and cuts their expenses in half. The company used to cost R11 Million to run each month now they think that they can get that figure down to R5.8 Million. To tide them over, a hedge fund in Cape Town is going to be putting in R40 Million to keep them afloat. A huge vote of confidence and roughly the cost to keep them running for 4 months at a reduced expense figure.

How Bad Is It?

Currently people owe Bridge somewhere between R154 Million and R186 Million however Bridge owe people (mostly pensioners) a massive R1.6 Billion.

Finding Out If It Is a Pyramid Scheme or Just Poorly Run

 

pyramid schemeAn audit of the companies by independent forensic auditor Andre Prakke is now underway who will be looking to see if any of the Aldum Family members were somehow moving money around within the organisation to either enrich themselves or trick investors.

If the entire plan doesn’t work out in the next few months and things don’t dramatically improve then investors and shareholders can expect the liquidation to come back into effect.