Duo say H&R club can't be Virgin territory

By Gustav Thiel Time of article published Mar 15, 2001

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The future of Cape Town's upmarket Point Health & Racquet Club is hanging in the balance as Richard Branson's Virgin Group battles the two directors of holding company LeisureNet, which was placed under provisional liquidation late last year.

Experts said the most likely outcome of the battle would be the closure of the premises on April 1, when Virgin takes control of the 85 Health & Racquet Clubs around the country.

Virgin bought the assets of the clubs, which operated as a section of LeisureNet, for R319,6-million from the liquidators of the company.

Ian Burroughs, Virgin's international operations director, said that the ex-directors of LeisureNet, Rod Mitchell and Peter Gardener, were being "mischievous" in their current attempts to scupper Virgin's plans to operate the Point in conjunction with the other prestigious health clubs around the country.

Burroughs said Gardener and Mitchell were using a technicality to prevent them (Virgin) from proceeding with plans to operate the Point from April 1.

According to the City Cape Town Council the property is leased to the Point Sporting Club, which then sublets it to the Point Sporting Clubs Limited with the council's permission.

Both these companies are under the direction of Gardener and Mitchell, but have nothing to do with LeisureNet.

Nico Fourie, a spokesperson for ClubClaims - a group aiming to get some compensation from the liquidators of LeisureNet for former Health & Racquet Club members - says Gardener and Mitchell "probably" separated LeisureNet from a group of 16 other companies to ensure their personal financial viability in spite of the liquidation.

While Virgin has guaranteed lease agreements for almost all the clubs around the country, Burroughs believes Gardener and Mitchell are planning to use the fact that two of these 16 companies still own the lease to the Point to operate this as their own private club in the future.

Gardener and Mitchell have said Virgin could go ahead and operate the Point club, but not under the Virgin Active name.

However, Burroughs said: "We are not interested in operating under the Health & Racquet Club name. If they (Gardener and Mitchell) carry on like this we will build a new facility in the area where we will be able to offer superior quality."

He added that the two directors have been liquidated "for other ventures" on four separate occasions in the past, and "they will not be able to operate this club anyway".

Fourie said that it looks "likely" that Gardener and Mitchell will not relent to Virgin's request to operate the Point under the name Virgin Active.

If that happens, Virgin will begin the construction of a new club in the area, leaving staff at the Point jobless.

Craig Talberg, general manager of the Point, described Gardener and Mitchell's recent actions as "shocking".

He said that Gardener exercises at the Point most mornings, but that some members treat him with hostility. Talberg said the staff and management of the Point were firmly behind Virgin.

Repeated attempts to contact Mitchell and Gardener proved fruitless.

Tracey Meaker, Virgin's director of corporate communications, said: "We hope reason will prevail. We want to safeguard jobs and upgrade facilities."

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