Consumer Industries Editor

CAPE TOWN Two senior nonexecutive directors and landlords of suite hotels operator The Don Group have resigned in the last six weeks.

Six weeks ago Marc Wainer resigned and this week the group announced that prominent businessman Sidney Ellerine had left with effect from May 13. This leaves only four directors on the board.

Chairman, CEO and executive director Thabiso Tlelai said their contribution would be missed. He expected to announce the appointment of another businessman to the board soon.

Wainer and Ellerine invested in 2001 through a vehicle called Ellwain Investments, which has a sale and leaseback agreement with the hotels operator. The agreement, covering most of the properties from which its suite hotels operate, relieved The Don Group of its onerous debt burden.

It pays R512000 a month in rent, according to its last annual report.

Wainer said yesterday he had not resigned because of any issues related to the rentals, but because his other business interests made it difficult to be involved with the group.

Ellerine also said there was no issue with the group's financial position or rentals. He resigned as he and his brother Eric had decided they would rather not be directors of listed companies.

The Don Group made a headline loss of R505000 for the six months to December against a profit of R2,9m a year ago, due to unexpected operating expenses.

However, the group holds R6,6m in cash, up from R4,4m in the previous year.

The only comparable business to The Don Group for which public figures are available is suite hotels operator Courtyard Hotels, which is 50% owned by City Lodge. In the six months to December 2003, City Lodge's income from the venture dropped about 20% to R1,3m but this was because most of the Courtyards had benefited from the World Summit in the 2002 interim period.

Don Group shares, which have risen almost 43% since the start of the year, closed yesterday up 1c at 10c.

The Bottom Line : Page 10

May 26 2004 07:09:39:000AM Charlotte Mathews Business Day 1st Edition