REVEALED: Dream World move - what next for WPRFU?
REACTION: The Western Province Rugby Football Union and South African Rugby Union can continue their ‘process’ to sell Newlands and repay the debts owed to Dream World Investments 401.
On Tuesday, it was revealed that Dream World has called up the bonds they hold on all the WPRFU properties – including Newlands, Millhouse, Brookside and Oranjezicht.
The legal process to have the properties sold on auction has been activated.
The ‘partnership’ with the Flyt Property Group allowed WPRFU to unlock a loan of ZAR112-million from Dream World Investments 401 (Pty) Ltd in 2020.
That loan was used to pay off previous debts owed to Remgro (ZAR58-million) and Investec (ZAR50-million).
Previously, it was reported that the asking price was ZAR500-million for Newlands, but as the saga surrounding the various factions in the fractious union dragged on and new challenges came out the woodwork, the administrators (three since October 2021) found it more troublesome getting a willing buyer.
Selling it on auction is not a quick fix – it will be a 18 to 24 months – but is the best option for a company that has clearly run out of tolerance for all kinds of foot-draggings and afterclaps.
One of the first challenges is getting a court date.
However, with potential buyers very reluctant to get involved in a property encumbered by the power games of the 90-odd clubs in a fractious union there is no guarantee that the process will be resolved speedily.
“For the past four years WP [the union] has been unable to sell the property [Newlands],” Riaan Munnik, Property Director at Dream World, told @rugby365com in an interview.
“We can’t afford to stop the litigation process,” he said, adding: “However, if there is no sale in two years, at least we will be in a position to go ahead with the auction.
Munnik confirmed that he has been kept abreast by Jooste in terms of the potential buyer, but the deal is conditional to the buyer getting financing – which means there is no guarantee that it will be resolved in the short term.
“It could be another two, three or four years before their approval is confirmed.
“We are simply not willing to run the risk of waiting only to find out it won’t happen.”
Munnik said the WPRFU can continue the process with the potential buyer, but they are just not willing to play the waiting game much longer.
Over the years there have been five or six interested parties, but they were often discouraged by the boardroom politics and unhealthy meddling by the power-hungry clubs.
While Peter Jooste, the SARU-appointed administrator of the WPRFU, does have a mandate to sell Newlands, the ‘club wolves’ and other political animals are still hovering in the background – leaving a treacherous and frightening path to the conclusion of said deal.
Munnik said their decision to go the auction route is not an indictment on Jooste and SARU.
“The fact is, it is a very difficult property to sell and to unlock Newlands as a development will cost an enormous amount of money – meaning it may not be worth as much as people think.
“We, Dream World, can’t run the risk that the cost [including the rising interest] becomes more than what the property is worth.”
Dream World Investments boss Dennis Venter said he is ‘tired’ of all the ‘promises’ of buyers that never materialised.
Venter, who signed the original ZAR112-million contract with banned controversial WPRFU President Zelt Marais back in June 2020, revealed that a number of potential ‘deals’ became empty promises.
“The costs are piling up, but the security [value of the properties] is not getting more,” a despondent Venter told @rugby365com.
The current ‘buyer’ also wanted a ‘two-year’ extension to get certain residential right – including for student accommodation.
“We are not willing to take the risk and wait, only to find out there is no deal,” Venter said
“We decided to draw a line in the sand.”
Venter said that while the escalating costs make it unlikely that Dream World would develop Newlands themselves,, he did not take that option off the table.
“However, we have to get the property at a reasonable price,” he told @rugby365com.
Jooste, in a statement to @rugby365com, said the current buyer has completed his due diligence.
“We are currently finalising the legal and contractual aspects of the proposed transaction.
“I want to emphasize that WPRFU remains fully committed to working with Dream World to resolve this situation.”
@king365ed
@rugby365com
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