November 27, 2003

By Ronnie Morris

Cape Town - Riviera, the four-star luxury hotel on the banks of the Vaal River, was yesterday sold for R12 million at the fall of the auctioneer's hammer.

The resort, built in the 1930s as the first leisure complex in South Africa, was snapped up by businessman Mac van der Merwe, who last year bought the Zorgvliet wine estate in Franschhoek for R31 million.

The successful sale by Rael Levitt, the chief executive of Auction Alliance, came after John Sherry, the founder of Jasco Electronics, for which he was awarded a peerage, failed in his Pretoria high court bid on Tuesday to halt the auction.

Judge Annamarie de Vos ordered that the entire hotel and its business be sold.

Sherry's first two attempts temporarily held the auctioneers at bay while he sought time to arrange a rescue package.

The hotel was placed in liquidation with liabilities of R30 million. Standard Bank and the receiver of revenue were listed as the major creditors.

Sherry had also bought the Waterfront commercial development in nearby Vereeniging and concluded an arrangement with the municipality to consolidate the golf course into the rest of the resort.

The golf course was excluded from the sale because it remained subject to a lease agreement. The liquidators would deal with this later.  

The hotel has been closed since mid-June after Sherry obtained a high court order to stop the sale and the liquidators ran out of funds to continue operating it.

The hotel has a 4.5km river frontage, 101 rooms, landscaped gardens, three restaurants, a pool with poolside facilities, a nightclub, and conference and banqueting facilities with a capacity of 250 people.

The resort was bought and renovated by Sun International in anticipation of establishing a casino. It was not, however, awarded a casino licence.

In August Sherry said guarantees were in place, but his offer of compromise to creditors failed on November 4, when no investors could be found to provide acceptable guarantees.

Levitt said not a day had gone by without local and international interest in the Riviera, and the auction was finally able to give clarity to the market.

"The Vereeniging area will finally be given a boost when new purchasers emerge to re-open the hotel," he said.

Marius van den Berg, one of four liquidators, said the delays in the hotel sale had caused considerable hardship to the 100 staff employed at the hotel.