225 / 280
BUSINESS MODEL
AND STRATEGIC
OBJECTIVES
LEADERSHIP
GOVERNANCE
OPERATING
PERFORMANCE
SHAREHOLDERS’
INFORMATION AND
ADMINISTRATION
FINANCIAL
PERFORMANCE
BLUE LABEL INTEGRATED ANNUAL REPORT 2014
223
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS
CONTINUED
For the year ended 31 May 2014
35.
LITIGATION UPDATE (continued)
Telkom sold its shareholding in MLT to Hip Oils Topco Limited on 3 October 2011. In terms of an indemnity
contained in the sale and purchase agreement, Telkom is liable for all amounts in excess of USD10 million in
respect of APSN’s claim against MLT.
Telkom and MLT instituted an action in the High Court against BLT, APS, APSN and certain individuals,
including a former senior executive of Telkom, for payment of an aggregate amount of USD724 million
(the action).
The claim in the action is based, inter alia, on an alleged breach of the duty of care and alleged
misrepresentations made by BLT, together with alleged breaches of fiduciary duties on the part of the former
senior Telkom executive, at the time the agreement was concluded, in respect of which it is alleged BLT was a
party to.
On 6 September 2013, Telkom and MLT obtained an order from the High Court which had the effect of
preventing the arbitrators from determining whether the agreement is valid and enforceable. APSN decided
not to appeal against the order and submitted itself to the jurisdiction of the High Court for the purposes of
defending the allegations made against it, BLT and the other defendants and for the purpose of proceeding
with its claim against MLT for payment of the sum of USD457 million arising out of MLT’s wrongful
repudiation of the agreement. At the same time and in the same action, APSN has advanced a claim against
Telkom for payment of the sum of USD457 million arising out of Telkom’s wrongful interference with APSN’s
contractual rights against MLT. To the extent that APSN is unable to recover its losses from MLT, APSN aims to
recover such losses from its claim against Telkom.
BLT and the other defendants vehemently deny the allegations made against them by Telkom and MLT, and
maintain that they are not liable.
A trial date has not as yet been allocated.