Labat to take action over apparently being sidelined in BEE deal
IOL - COMPANIES / 24 JULY 2019 - 08:00 / EDWARD WEST
Labat Africa is planning legal action to prevent the further operation of a R50 million composite manufacturing plant in Germiston that opened last week, because the 49 percent owner of the plant, BFG International from Bahrain, had allegedly sidelined them in the deal and appointed a new empowerment partner.
Labat Africa chief executive Alfred van Rooyen said the plant formed part of the requirements for a R3.5 billion, 240 locomotive supply tender to Gibela Rail Transport Consortium, from the Passenger Rail Agency of SA (Prasa), of which BFG International was Labat Africa’s international partner, a tender which the Bahrain-based company could not have won if it did not have its local 40 percent partner.
Website screenshot (labat.co.za)
“This is another case where an international firm just sidelines their BEE partners,” said Van Rooyen. “They (BFG International) asked us to help in the setting up of the plant and finding a site, but they never told us they had taken on a new partner. “I was invited to the opening of this plant by a third party,” he said. Van Rooyen added that Labat Africa’s 40 percent black empowerment shareholding with BFG International in the tender award had never been cancelled.
The new plant, which opened last week, was owned by BFG International subsidiary BFG Africa, which was 51 percent owned by local blackowned investment group Mergence and by BFG International. BFG’s lawyer, Michael Judin, said there was no claim against Mergence. The claim was against BFG International and Mergence would refute any claims made against it. The factory produces materials made of fibre-reinforced plastic for use in the infrastructure, mining, automotive, transport and architectural sectors.
Last week, Trade and Industry Minister Ebrahim Patel welcomed the investment as a positive step for localisation of component manufacturing. BFG International is one of the largest diversified composites manufacturers in the world. Mergence acquired its stake in BFG Africa in June last year. As an initial contract, with the Gibela Rail Transport Consortium, BFG Africa would clad the interiors of 600 commuter trains being supplied to Prasa over a 10-year period. The first delivery on this project was met in May this year.
Labat Africa said in a JSE SENS announcement in 2014: “The BFG/ Labat entity has been awarded a portion of the Prasa/Alstom tender to supply interiors for the new railway over a 10-year period. The first phase of this tender is estimated to be at least R1.5bn over a 10-year period. “The plan is to establish a fully fledged BFG facility in Johannesburg, producing a full range of BFG products, including a range of rail products together with a range of architectural and winder energy products.” BFG Africa managing director Arshad Gove said he wasn’t aware of issues concerning Labat Africa as he had only been in South Africa for a few months to manage the plant. Our emails to BFG in Bahrain were not responded to yesterday.
Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER