THABANG MOKOPANELE

Property Editor

EMBATTLED leisure and lifestyle property group Pinnacle Point seems to be turning a corner in its attempt to recapitalise after getting a R100m capital injection from a South African fund ahead of its planned rights offer.

It planned a R360m rights offer in order to raise at least R195m and reduce borrowings by R165m. Pinnacle said yesterday that the investment made the agreement with Absa to underwrite R220m of the rights offer unconditional in all material respects.

The raising of R100m of new capital was a condition set by Absa in order for it to underwrite the rights offer.

Absa, which holds 27,4% of Pinnacle’s issued share capital, would undertake to subscribe for R220m worth of shares in the rights offer, but wanted to be considered for the first R125m worth of such shares, which would extinguish its loan to the group. It also wanted R95m worth of such shares in cash.

Another major shareholder, GMA, had also agreed to convert its debt of $5m into equity, bringing the total committed capital injection into the company to about R360m.

The group said that as a result of the recapitalisation, it would have the financial strength to execute its property developments in Nigeria, the Seychelles and SA properly.

Pinnacle would issue 667-million new ordinary shares at 15c a share in terms of the R100m subscription by the fund. The new shares in issue would represent a 14,5% increase in the ordinary share capital of the group. The 15c represents a premium to the volume weighted average price of Pinnacle shares in recent weeks. The fund is a public shareholder as defined by the JSE listings requirements.

Pinnacle’s CEO, Hennie Pretorius, said the investment showed the market’s confidence in the future of the group and its ability to implement its development plans.

“We are delighted that the potential of the company has been recognised 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 would be applied primarily to funding the Lagos Keys development in Nigeria and completing South African developments.

“The recapitalisation deal effectively means we are able to proceed with phase one of Lagos Keys … 430 erven targeted at Nigerian high-net-worth individuals, an 18-hole international standard golf course, five-star hotel, a marina, a retail complex and other luxury amenities,” Pretorius said.

At the high end of the market in Nigeria, demand remained strong and he expected Lagos Keys to be the largest contributor to group performance in the years ahead. It would also mean that “a substantial portion of the group’s future revenue will be dollar-based”.

This email address is being protected from spambots. You need JavaScript enabled to view it.

Source: Business Day