Competitors square up in ownership fight,
writes Terry Hutson
THE RECENT voluntary
liquidation of Durban-based bunkering company Ugumac Marine Services to avoid costly litigation ends a lengthy saga as South African bunker suppliers square up to each other.
The subject of the dispute is Ugumac's bunker barge Durban Servicer, which operated in the Port of Durban with an average monthly delivery of 7 500 tonnes. The other two operators in the field are Smit Pentow Marine and FFS Bunkers, who both operate barges in Durban.
FFS has the only barge service at Richards Bay, but when Smit Pentow Marine recently announced it intended competing in the port, the gloves came off, with Smit Dudula, a new empowerment company formed between Smit Pentow and Dudula Shipping, declaring it anticipated a competitive environment.
Faced with the prospects of impending war, in which they saw themselves as a likely victim, Ugumac chose to withdraw gracefully and put Durban Servicer up for sale for R3 million. The other two companies each announced an interest in acquiring the barge, probably as a strategic investment against one another.
What was said at the resulting negotiations is now a matter of dispute. Both parties claim verbal agreements that offered the barge to them, which Ugumac denies. However, and no doubt after having considered the implications of Smith Pentow being an important client of one half of their parent company, Dormac Marine Ship Repair, Ugumac opted to sell to Smit Pentow.
This brought about an immediate response in the form of an interdict against Ugumac, effectively stopping the sale.
The matter then went to arbitration, which decided in favour of FFS, leaving Smit Pentow Marine to issue summons for damages in the amount of R17.6 million and to have the barge arrested, preventing the sale going through.
All of which left Ugumac, which was one of South Africa's first black empowerment marine enterprises, facing an extended legal battle against a company with the resources of the Smit International Group. Given the size and nature of the claim, it also faced having to put up financial guarantees until the case came before the courts, which could take several years.
Ugumac told FTW that it realised it also could not deliver the barge to FFS Bunkers in terms of the arbitration award, and that this would lead to substantial damages from FFS. It therefore decided on what it saw as the only other way out, that of going into voluntary liquidation and leaving it to the liquidator to sort out the mess.
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