The owner of the development, A Million Up (AMU), is in final liquidation following property developer Quantum Property Group’s failure to repay an initial R400m loan that Absa had advanced to build the property. AMU is the subsidiary of Quantum and the development is its sole asset.
The development consists of the hotel itself, with 129 rooms, a residential component of luxurious penthouses, a boutique retail centre, a venue facility, and four levels of parking space.
Absa intends to buy the property from the appointed liquidators. Once the deal is concluded, the bank will have sole control over the assets, excluding any liabilities.
The Competition Commission has recommended an unconditional approval of the deal by the Competition Tribunal.
The commission concluded that the deal was unlikely to lessen competition in the market substantially.
The deal comes before the tribunal on Wednesday.
In June of last year, Quantum applied for business rescue after it was unable to repay the Absa loan.
Absa, however, brought a successful court application to have the resolution for business rescue by the board of Quantum set aside.
AMU was placed under provisional liquidation, and in August Quantum asked the JSE to suspend the listing of its shares, saying its main asset, AMU, was under final liquidation.
According to media reports at the time, the liquidation came barely a year after Absa had agreed to restructure and extend AMU’s development loan — which had already swelled to about R480m at the start of the 2011 financial year — with additional bridging finance.
At the time, Absa was accused in court papers of safeguarding its interests to the detriment of Quantum’s shareholders.
In its unaudited results for the six months ended February last year, published in June last year, Quantum said the hotel industry continued to experience extremely challenging trading conditions.
Despite that, there had been an increase in revenue and occupancy levels over the previous year.
The hotel opened its doors in December 2009.
Source: BD
