Ian Fife

Until now, investors in Bonatla who sold out in the brief moment in February when it hit a two-year peak of 75c might have gone down as its most successful shareholders in the property investment company’s recent history.

Bonatla founder Niki Vontas is like the driver of a car that’s still on two wheels when it hits the next corner, and the next, and so on. Whatever thrills he has extracted from this, his shareholders must surely feel they have been taken for enough of a ride (see graph). But a new move last Friday might give them the opportunity to get out.

Vontas’s most recent move was buying Renong SA in January from the Malaysian investor in Durban’s Point development for R190 million. This gave Bonatla 40% of the 55ha Durban equivalent of Cape Town’s V&A Waterfront, with control of 50%. The other 50% is owned by the eThekwini (Durban) metro. Properly done, this could be a brilliant move at a time when the industry is desperately short of development land.

But the purchase was classic Vontas a R35m deposit due already and R115 million in renounceable shares due on April 30. Bonatla is also paying R39 million plus Vat in commission to three parties — R9,75 million to CDA Properties, its asset manager, and about R29,25 million to Eastbroom Trading, trading as Al Maskour Consultants, and Contense Investments. That’s 26% of the price, where commissions on these projects are usually 3%-4%.

Then, three weeks ago, Bonatla announced that it had signed a heads of agreement to sell 70% of its interest to development giant Zenprop. This was subject to a due diligence. It could have been done in a week, and the silence has been deafening, so it’s a racing certainty that Zenprop has walked away from it.

Vontas’s situation could be bleak. But last Friday, when the shares were down to the mid-50c level, Bonatla announced that it had bought Saxum Reinsurance by issuing 163,75 million shares at 80c/share, with the resale of two subsidiaries back to the vendor, Bundobust 12, for R66 million in cash.

As there are around 335 million shares in issue after this deal, Bundobust effectively takes control of Bonatla and will have to offer 80c to the remaining shareholders. Bonatla’s Sens announcement doesn’t mention a suspensive condition, but Saxum chairman Sandy Sanderock says there is, and it will take another two months to meet it.

Bonatla was built and in part destroyed by overpaying for properties with overpriced Bonatla shares. Delighted owners of property worth, say, R100 million, would be paid R120 million with Bonatla shares valued at R1 each when they were actually trading at, say, 75c.

Some canny sellers woke up to this theatre of the absurd and demanded guarantees. Vontas says he personally took responsibility for the guarantees to save Bonatla from an R80 million contingent liability. He was subsequently sequestrated.

His partner, Carolyn Douglas, asset-manages Bonatla through her company CDA and is an executive director. Her father, Robin Rainier, is the CEO. Vontas is retained as a consultant.

As with the previous purchase, Vontas wobbles between triumph and disaster with the terms of the deal. A new manager with R66 million in cash and skill at extracting the most from a development could possibly revive the Durban Point purchase, finally building Bonatla into a company shareholders can take seriously.

On the other hand, other bidders for Renong’s share in The Point say they valued it around R100 million and Vontas overpaid. So why would Saxum accept overvalued shares carrying an overvalued purchase for their assets? The Sens announcement’s pro forma effects of the deal indicates a net asset value of 38,9c. Saxum appear to be a relatively new company and its website makes no claim to property experience but the company claims to have a unique risk management model.

The announcement gives scant details of the deal, except to say without irony that it is “in line with the board’s current strategy of building shareholder value”, and “will enhance Bonatla’s vision of a global property business”.

That sounds like the call of a desperate purpose in search of money. If I were a Bonatla shareholder faced with a cash offer of 80c and no convincing evidence of brilliant new management with clear plans, I would take it and run.

Financial Mail