Wednesday, July 27, 2011

Capicol to be paid for malls ‘in future’

Capicol to be paid for malls ‘in future’
July 27 2011 at 05:00am
By Roy Cokayne

Capicol, the developer of the Zambezi Retail Park and The Villa, will only receive payment “some time in the future” from the troubled Sharemax group for these two mall developments.

The Sharemax board last week announced the transfer of ownership to Sharemax companies of the partially completed property developments it had syndicated but did not provide any details on how the change of ownership had been achieved.

A Sharemax spokesman had previously disclosed that some of the companies in the group were bankrupt and Sharemax did not have the money to pay outstanding amounts to allow the transfer of ownership of the developments to take place.

But Sharemax financial director Dominique Haese confirmed on Monday that the settlement agreement with Capicol was structured in such a way that payment to Capicol was only due “in the future”.

Haese said the Sharemax board had been active in trying to source funding from various parties but could not disclose further information about this.

She said the idea was to “cleanse” the old Sharemax structure if all the shareholders agreed to the scheme of arrangement process.

“Once that has been done, banks may be interested to get involved because it makes commercial sense. Various investors have indicated they might want to come on board if it (Sharemax) is cleansed,” she said.

Sharemax Investments owes R64.5 million to Capicol in terms of an arbitration award related to the Zambezi Retail Park.

GD Irons Construction has a lien for more than R100 million over The Villa for completed, but unpaid, work. It has confirmed this lien is still intact.

In a statement by the Sharemax board last week, it said the transfer of ownership of the two properties meant that the boards of the Sharemax group were now able to progress with the implementation of the schemes of arrangement processes, which were expected to be completed by the end of next month.

The change of ownership was for 100 percent of the Zambezi Retail Park and 80 percent of The Villa. It was contractually agreed that Capicol’s 20 percent interest in The Villa would be available for acquisition at various stages at predetermined amounts. It also referred to a suspensive condition in The Villa agreement, which had to be fulfilled by August 15.

Haese said Capicol had been working on a solution to The Villa and this condition was to allow it to follow up properly on the work it had been doing.

However, this condition would fall away if Capicol did not manage to come up with a better solution by August 15, she said.

Meanwhile, Efficient Group chairman and chief economist Dawie Roodt, who was last year one of three new independent non-executive directors appointed to the Sharemax group of companies, resigned his Sharemax directorships on Friday.

Roodt said on Monday that he had resigned because he believed he had contributed as much as he possibly could to Sharemax. However, he admitted there was some “tension” between the directors at board level.

His resignation came one day after the new Sharemax board announced the transfer of ownership of the Zambezi Retail Park and The Villa.

The three independent non-executive Sharemax directors were appointed by the statutory managers, who were appointed by the registrar of banks to manage the repayment of investor funds after an investigation into the affairs of Sharemax found its funding model contravened the Banks Act.

Sharemax defaulted on monthly payments to investors from September last year.

Construction on both the Zambezi Retail Park and The Villa stopped in the same month when funds from Sharemax to Capicol dried up. About 40 000 shareholders have invested R4.5 billion through Sharemax’s various property syndications. – Roy Cokayne

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