Lml4806 Assignment 02 2024 Semester 01

LML4806 Assignment 2 COMPLETE ANSWERS) Semester 1 2024 - DUE April 2024 100% TRUSTED workings, explanations and solutions. for assistance Question: 1 Coffee Bean Lovers (Pty) Ltd (‘the company’) buys coffee from Kenya and distributes it to different coffee shops in South Africa. Due to an infestation of bugs at one of the coffee plantations, the company will not be able to get deliveries of coffee from Kenya for the next three months. Instead, the company will have to import coffee from Uganda at a much higher cost. As a result, the company’s cash flow will be affected severely. Pat, one of the directors of Coffee Bean Lovers (Pty) Ltd, has informed Jane and Steven, two of the employees of the company, that the company may face serious financial difficulties in the next three to twelve months and that they will not be paid their salaries for the next two months as the company will first have to pay other creditors. Jane and Steven have heard about business rescue, and are of the view that business rescue proceedings may be appropriate in the circumstances to assist the company to survive and to ensure that they will still be paid their salaries. Jane and Steven approach you for advice on business rescue proceedings. With reference to the relevant statutory provisions: 1.1 Explain what business rescue is and indicate the circumstances in which business rescue proceedings may be used. (5) 1.2 Advise Jane and Steven how business rescue proceedings may be commenced and indicate whether Jane and Steven, in their capacity as employees, would have any means of ensuring that the business rescue proceedings are commenced. (5) Question: 2 Springboard (Pty) Ltd and Scapegoat (Pty) Ltd have concluded an agreement in terms of which these two companies will merge and consolidate their businesses because they are competing in a small market. The material terms of the agreement include that the two existing companies will cease to exist after the merger and a new company, Togetherness (Pty) Ltd, will hold all the assets and liabilities of the two merging companies. Furthermore, the shareholders of Springboard (Pty) Ltd will receive a share consideration of one share in Togetherness (Pty) Ltd for every three shares they hold in Springboard (Pty) Ltd. The board of Springboard (Pty) Ltd holds separate informal discussions with all the shareholders of Springboard (Pty) Ltd regarding the proposed merger ahead of a scheduled shareholders’ meeting to consider and, if appropriate, approve the merger. During the informal discussions, the shareholders holding about 80% of the general voting rights in Springboard (Pty) Ltd indicate that they will support the merger. However, a group of shareholders holding between 10% and 20% of the general voting rights in Springboard (Pty) Ltd indicate their dissatisfaction with the proposed merger as they are of the view that the proposed merger consideration is inadequate and does not reflect the fair value of their shares in Springboard (Pty) Ltd. These shareholders are also concerned that Scapegoat (Pty) Ltd has been experiencing financial problems and the board of directors has not disclosed to the shareholders of Springboard (Pty) Ltd the true financial state of Scapegoat (Pty) Ltd. They are concerned that any significant financial problems can cause the merged company to fail soon after the merger. With reference to the relevant statutory provisions, advise the board of Springboard (Pty) Ltd on whether and how (if at all) the shareholders opposed to the merger would be able to prevent the With reference to the relevant statutory provisions, advise the board of Springboard (Pty) Ltd on whether and how (if at all) the shareholders opposed to the merger would be able to prevent themerger from taking place