An application to liquidate Orion Real Estate has been launched by the financial company. File Photo: IOL
JOHANNESBURG - Investec has launched an application to liquidate Orion Real Estate (Orion), whose listing on the JSE had been suspended at the beginning of last month, because of the company's failure to publish its annual financial results within the three-month period stipulated in the JSE’s listing requirements.

Orion disclosed this yesterday when it announced that it had agreed to sell the Promenade Shopping Centre in Nelspruit to Prinia Asset Management for R180million.

Orion said that Investec’s decision to apply for the liquidation of the company had led to its decision to dispose of the centre.

The selling price is below the R212.5m independent valuation of the property at end-June this year.

The 14500m² shopping centre comprises a retail centre, offices and the Orion Hotel, with the total net rental, excluding VAT, amounting to R1.5m a month.

Orion said that a portion of the proceeds from the sale would be applied to settle amounts that were owing to Investec in full, with the balance applied to other mortgage debt and to provide working capital, which would effectively leave Orion debt-free.

“Accordingly, the liquidation application will be opposed by Orion, and Orion is in the process of securing new guarantees in favour of Investec,” it said.

Orion added that its bond finance from Investec amounting to R116m came up for the five-year renewal during this calendar year and Investec had elected not to renew these bond facilities.

The company said it secured replacement funding to the value of R233m from FedGroup, including additional funding for the acquisition of nine new properties, and that FedGroup had issued guarantees to the various parties.

However, Orion said that FedGroup unexpectedly withdrew the guarantees on November 29 and advised the company that they were prepared to reissue the guarantees.

But Orion said the onerous conditions that were to be imposed were not acceptable to its controlling shareholder.

Orion said it would only be able to publish its financial results in the new year, because of these recent events and the unavailability of staff at its auditors during the festive season.

The company yesterday also disclosed that it had entered into an American-style option agreement with Celtic Knot to subscribe for up to 250 million shares in Orion over a five-year period commencing from December 12 at a subscription price of 90cents per share.

The share offer is subject to the disposal of the Promenade Shopping Centre becoming unconditional on or before April 30 next year and shareholder approval of the specific issue of shares for cash in the event of the Celtic Knot exercising the option.