THABANG MOKOPANELE
Property Editor
EMBATTLED leisure and lifestyle property group Pinnacle Point yesterday warned that tough economic conditions and tight lending conditions by banks will have an adverse effect on its performance, particularly in the first half of the 2010 financial year.
The group, which is in negotiations with its funders to raise capital, said its ability to continue as a going concern was dependent on the successful conclusion of the negotiations.
Pinnacle Point requires an additional R250m capital to meet its working capital requirements and realise the potential of its property assets as a going concern.
The group intended to focus on its two international developments in Lagos and the Seychelles. It said both developments offered unique opportunities for growth.
“We believe that they will be successful, even in the current market situation, as they are aimed at high net worth individuals,” the group said.
It was expected that the Lagos Keys development would start soon and be the largest contributor to the group’s performance for the year ahead.
In the South African market, the group intended to focus on completing some of its existing projects and ensuring that these would be well positioned to take advantage of any improvement in market conditions.
Last month, the property group lifted its trading cautionary following an agreement with shareholder Absa Bank.
The group, which has a dual listing in Nigeria and SA, said it was confident it would meet all of the conditions set by Absa.
In terms of the deal, Absa’s current debt facility of R70m was to be capitalised, while a further bridging debt facility of R55m would be made available to Pinnacle — which would be capitalised in due course.
In addition, Absa would underwrite R95m of a proposed rights issue, which was conditional upon certain conditions being met, primarily that Pinnacle raise a further R100m in new capital.
The deal follows several months of negotiations, during which Pinnacle had been operating under a cautionary announcement.
The group had achieved a secondary listing on the Nigerian Stock Exchange some months ago to access new capital markets. The new capital would be applied primarily to the funding of the group’s Lagos Keys development.
The group has signed a “definitive agreement” with the Lagos state government to develop and construct a multibillion-dollar luxury golf estate, including 430 homes, a 160-bedroom five-star hotel and a 100-berth marina.
Nigerian investors had already invested R390m in Pinnacle. Chairman Lazarus Zim said it was important to give Nigerian investors the opportunity to share in the success of the group.
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Source: Business Day
Publisher: I-Net Bridge
Source: I-Net Bridge
