CAPE TOWN - Dream World Investments, a company within the Flyt Property Investment Group, have agreed to advance R112 million to the Western Province Rugby Football Union to pay off its debt to Investec (R50 million) and Remgro (R60 million), WPRFU president Zelt Marais confirmed.
Prior to a Special General Council meeting held on Thursday night, constituents voted on the proposals to take place during the meeting, which included the WPRFU having to register a new mortgage bond on Newlands to obtain the loan.
According to Marais, Flyt Property Investment (Pty) Ltd entered negotiations with the WPRFU on June 3 after the sale of Newlands Stadium to Investec fell through because of “suspensive conditions not being met timeously”.
A price of R110 million for the purchase of development rights and a 99-year lease of the property by Investec was accepted in 2019. The final sale of Newlands development rights was supposed to be completed in the first week of June, and earlier reports alleged that Marais decided not to sign off on the final agreement.
“On 1 June 2020, a transaction in an agreement between WPRFU and Investec to develop the Newlands Stadium site failed due to suspensive conditions not being met timeously,” he said.
“The suspensive conditions were that certain Long-Form Agreements were to have been entered into by midnight on 29 May 2020 after having consented to five extensions. However, the terms of the proposed development agreement set by Investec were not acceptable to WPRFU - acting in good faith in the best interests of its constituents - and the transaction contemplated in the agreement with Investec failed.”
Western Province Rugby Football Union preident Zelt Marais. Picture: WPRFU
Regarding the loan agreement with Flyt Property Investments, a proposed loan agreement between Dream World Investments 401 Proprietary Limited and the WPRFU was drawn up following negotiations. The terms of the loan include Dream World agreeing to advance R112 million at the prime lending rate for a term of four years, with the aim of “consolidating WPRFU’s debts and enabling WPRFU to unlock the inherent value in the Newlands stadium property to put it on a firm financial footing.”
It is suggested that Flyt and the WPRFU incorporate a new company - Newlands DevCo - to be owned equally by both parties. The purpose of this new company will be to obtain building plan approval for the development of Newlands as a mixed-use development.
“Newlands DevCo is envisaged as a 50-50 partnership between the WPRFU and Flyt Property Investment. Importantly, this will mean that – unlike previous loan and redevelopment arrangements – the WPRFU will have a 50% share in the economic benefits derived from the future development of the site. This will ensure the sustainable future of Western Province rugby and, specifically, the opportunity for investment in clubs in our poorer communities over the longer term,” Marais explained.
Another new company, Brookside DevCo, will be incorporated between the WPRFU and Flyt Property Investment. This new company will purchase the Brookside property and aim to acquire development rights for the development of the Brookside property as a mixed-use development. This deal is anticipated to give the WPRFU access to an estimated R40 million in cash in addition to 50% of development profits down the line.
This proposed loan agreement and development proposal is to be considered by the Council of the WPRFU at a meeting to be held on Tuesday, June 30. The proposal is to be considered further by a Special General Meeting on Wednesday, July 8.