By Thabang Mokopanele

EMBATTLED leisure and lifestyle property company Pinnacle Point Group has become one of the first companies to file for a business rescue under the new Companies Act.

The act, which came into effect last month, provides for proceedings to rehabilitate a company that is financially distressed, including temporary supervision and management of its affairs.

Pinnacle Point’s lawyer John Taylor, a shareholder in the company, said in his application to the Western Cape High Court yesterday that though the company owned a number of blue-chip properties, at different stages of completion, their development had ground to a halt due to working capital constraints.

Mr Taylor said the company was unable to pay building contractors and other creditors. With property values staying depressed, Pinnacle’s balance sheet had also taken a hit.

Pinnacle, formerly called Acc- Ross Holdings, listed on the JSE at 110c per share in 2006. Bloomberg puts its current market capitalisation at R70m, on a share price of 1c.

Pinnacle’s total assets amount to R1,4bn, while its total liabilities come in at R604m.

"Some, like its Wedgewood development near Port Elizabeth, are 90% completed and need very little expenditure to unlock several million rand worth of transferable property. Others, like its Romansbaai development near Hermanus, are at the initial stages of development but show great promise," Mr Taylor said.

Though there are signs that the property market is turning, Pinnacle is finding it hard to operate because of working capital constraints, with developers and other sellers taking strain due to buyers finding it difficult to obtain mortgage loans from commercial banks.

Two years ago the company avoided suspension from the JSE for submitting its interim report late. Yesterday, the JSE issued a Stock Exchange News Service announcement telling shareholders Pinnacle had been given a two-week grace period to release annual results.

The JSE said the company had failed to submit its provisional reports timeously, and the listings of its securities were under threat of suspension and possible termination. Should the company fail to submit its provisional reports by June 30, its listings would be suspended.

Mr Taylor said Pinnacle and several subsidiaries were faced with liquidation proceedings that may be prevented by placing the relevant companies under business rescue.

Source: Business Day