THABANG MOKOPANELE

Property Correspondent

LEISURE and lifestyle property group Pinnacle Point said yesterday it required an additional R250m capital to meet its working capital requirements and realise the potential of its property assets as a going concern.

The group was in discussions with its stakeholders and lenders to restructure debt facilities and recapitalise.

As part of the process, the group has appointed advisers for guidance on the strategic options available that would allow a normalisation of its liquidity and credit funding position.

Pinnacle yesterday concluded an agreement with Absa Bank, a material shareholder, with Absa agreeing to provide funding of R220m. The group said Absa would underwrite R150m of a proposed rights issue of R250m at a price to be determined.

Absa also undertook to convert its current debt facility of R70m into capital at the same price as the rights issue, provided the rights issue was successful.

Last month, Pinnacle chief operating officer Stefan Braun said: “These negotiations are in process and clarity is being obtained on certain issues. However, until such stage as these issues have actually been addressed to the satisfaction of the funders, the ability of the company to continue as a going concern will remain in question, with the result that our results need to be qualified.

“We anticipate the removal of the qualification within a period of 30 days, provided all the issues are resolved,” Braun said.

The underwriting of the rights issue was conditional on at least R100m of the R250m that Pinnacle intended to raise coming from new or existing investors other than Absa before the end of October.

The underwriting was also conditional upon the voting pool agreement entered into by major shareholders being terminated and the rights issue implementation being unconditional.

In order to enable Pinnacle to continue trading until the rights issue had been successfully concluded, Absa had agreed to provide a further bridging debt facility of R55m, subject to certain conditions being met by Thursday. The R55m would form part of the rights issue.

Pinnacle said it had recently secured definitive land rights to the Lagos Keys development in Nigeria.

The group said it was in discussions with its major shareholders and interested parties to take up R100m of the rights issue, which would bring the total capital raised to about R360m.

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Source: Business Day