Sharemax’s board of directors has warned that the rescue plan for The Villa shopping mall – presented to shareholders last week – is unworkable in its current form.
Moreover, the plan to save the R3,5-billion shopping mall contravenes a directive from the Registrar of Banks, which placed Sharemax and all its syndications under statutory management.
Willie Botha, former managing director of the company, proposed raising R100-million from current investors – an amount of R12k each – and using the money to prevent the centre from being liquidated and the scheme collapsing.
Botha claims that the unfinished shopping centre is worth about R900-million in its incomplete state but would probably fetch about R300-million if it was sold on auction or was part of a forced liquidation.
Apparently a number of different proposals have been presented to Sharemax’s board including those that suggest securing further funding to protect investors in the property syndication.
According to the board none of the proposals offers a workable solution and some might even contravene the Reserve Bank’s directive. Kallie Erasmus, the spokesman for the investor group says that shareholders face a real risk that they might lose their investments completely.
Construction company GD Irons holds a lien over The Villa for work done that has not been paid for and is apparently owed R150-million by Capicol, the company responsible for developing The Villa and Zambezi Retail Park.
Meanwhile Capicol’s chief executive Paul Kyriacou has claimed that the company will pay GD Irons the R100-million owed by the end of the month. Payment will comprise assets, property and cash.
Sharemax’s directors have decided to launch a scheme of arrangement in terms of section 311 of the Companies Act, which will comprise an offer of compromise and an arrangement between the company, its shareholders and its creditors.
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