The fate of The Villa, the partially completed R3.5 billion retail development east of Pretoria, is likely to become clear by the end of this month.
The Villa is syndicated by Sharemax Investments and funded by about 8 000 investors, most of them pensioners.
Former Sharemax Investments managing director Willie Botha proposed a rescue plan to the board of The Villa in December in an attempt to prevent investors losing hundreds of millions of rand, but it did not receive the board’s unanimous backing.
Construction of The Villa came to a grinding halt in September last year when funds from Sharemax to Capicol, the developer, dried up after the registrar of banks notified Sharemax that its funding model was contravening the Banks Act.
GD Irons Construction, the contractor, has a lien of more than R150 million over The Villa for work completed for which the company has not been paid.
Botha said last week that GD Irons did not want to liquidate The Villa but owed subcontractors about R60m and time was running out to save the project.
Botha’s rescue plan proposes raising R100m from current investors, which amounts to a further R12 000 from each of them, to remove the liquidation risk and allow for a deal to be done for the transfer of the property into the investor company.
Investors, with the assistance of property companies, could then look at ways to make the property viable, sell it under normal circumstances or raise finance to complete the project.
Dominique Haese, an executive director of The Villa, said a letter the board wanted to send to investors about the rescue plan stated it was subject to certain procedures, including obtaining agreement from Capicol. However, she said, the registrar of banks refused to allow the board to mail it because he did not believe it was factually accurate.
Dawie Roodt, the chairman and chief economist of the Efficient Group and an independent director of The Villa, confirmed on Friday that he was opposed to the rescue plan because “companies under statutory management are not allowed to trade with the assets of the company without the approval of the Reserve Bank”, and too many unanswered questions remained.
Roodt said it was the responsibility of the board to look at all alternative options available to prevent The Villa from going into liquidation.
GD Irons Construction managing director Geoff Irons said he was not prepared to waive the lien until the debt was settled but was willing not to institute legal action against Capicol now if his company received R100m of the amount owed. He stressed the R100m was desperately needed and he wanted payment by the end of this month to enable his company to settle debts with its creditors and subcontractors.
Irons said in the interests of the company and its subcontractors, his company at some point would have to institute liquidation proceedings if payment was not received.
Capicol chief executive Paul Kyriacou said on Friday Capicol would “never transfer the property” until it was paid and questioned Botha’s rescue plan.
Kyriacou said raising R100m might stop The Villa from being liquidated, but investors were not being told the reality, because he estimated it would cost an additional R700m to R800m to get the project back on track after all the delays. - Business Report