This investment in the Company makes the agreement with Absa to underwrite R220 million of the rights offer unconditional in all material respects.

Another major shareholder, GMA, has also agreed to convert its debt of approximately US$5 million into equity bringing the total committed capital injection into the company to approximately R360 million.
 
As a result of the recapitalisation, the Group will have the financial strength to properly execute its property developments in Nigeria, Seychelles and South Africa.

The raising of R100-million of new capital was a condition precedent set by Absa in order for it to underwrite the rights offer.

Pinnacle Point will issue 667 million new ordinary shares at 15c a share in terms of the R100 million subscription by the fund. The new shares in issue will represent a 14.5% increase in the ordinary share capital of the company. The 15c represents a premium to the volume weighted average price at which Pinnacle Point shares traded in recent weeks.

The Fund is a public shareholder as defined by the JSE listings requirements.

Pinnacle’s CEO Hennie Pretorius, who was recently appointed to steer the Company through the tough times in the property market, says the investment shows the market’s confidence in the future of the Company and its ability to successfully implement its development plans. Pretorius says Pinnacle was relatively confident from the start of being able to raise the new capital due to the potential in the Company.

“We are delighted that the potential of the company has been recognized by the new investors and grateful that Absa has continued to support the company during what has obviously been a difficult period in view of the impact of the global credit crunch and meltdown in the property market,” he said.

The new capital will be applied primarily to the funding of the Group’s Lagos Keys development in Nigeria but will also be employed in completing the current active South African developments.

“The recapitalisation deal effectively means that we are able to proceed with phase one of the Lagos Keys Development.  This will comprise some 430 erven targeted at Nigerian high net worth individuals, an 18 hole international standard golf course, 5-star hotel, a marina, a retail complex and other luxury amenities associated with a world class resort.”

Pretorius noted that the Group had achieved a secondary listing on the Nigerian Stock Exchange some months ago, in order to access new capital markets, and that Nigerian investors have already invested R340 million in the Group.

“Nigeria is one of the most exciting countries in Africa for business.  The head offices of some of the largest international companies are based in Lagos, as well as the country’s top financial, oil and telecoms companies.  At the high end of the market in Nigeria, demand remains strong, and we fully expect therefore that Lagos Keys will be the largest contributor to the Group’s performance in the years ahead.  As a result of this project a substantial portion of the Group’s future revenue will be US dollar based”, said Pretorius.