Johannesburg - The beleaguered Pinnacle Point Group
[JSE:PNG] is staring at liquidation as it is unable to meet its financial obligations towards Investec [JSE:INL].
The AltX-listed property company is largely involved in developing golf estates. These developments have been heavily hit by the economic downturn after sales of stands dried up practically overnight.
On Wednesday Investec submitted an application for the company’s liquidation to the Cape Town High Court and the matter will be heard next Wednesday.
Investec group risk manager Ciaran Whelantold Sake24 that the company owed the bank R85m.
He said Pinnacle Point was expected to oppose the application.
He said the application principally related to Pinnacle Point’s Mossel Bay golf-estate development on the Garden Route and the Clarens Golf and Trout Estate development in the Free State.
The Mossel Bay development includes the company’s flagship golf estate and some 150 unsold stands. The Clarens development includes the golf course and an unknown number of unsold stands, as well.
Whelan said the application was the result of Investec’s unsuccessful efforts to reach an arrangement with the company.
Pinnacle Point’s acting chief executive
Steven Kruger said the application for liquidation affected only Pinnacle Point Estates, a subsidiary of the company.
But, he said, an offer was on the table for one of the golf estates, which would cover the debt and where certain conditions had already been met.
He said the transaction could be finalised in March, and so for Investec to adopt the current approach was therefore premature.
If the application should succeed, these golf developments would follow in the footsteps of a number of others that had collapsed in recent years.
One of the first golf developments to go under was the R150m Highland Gate Golf and Trout Estate in Dullstroom, for which Investec had also provided mortgage finance.
Last year the Sitari Fields Golf Estate in Somerset West was auctioned off after having been put into provisional liquidation the year before.
More recently the development company for the Cotswold Downs golf development in Hillcrest allegedly also encountered problems with its indebtedness to the bank. The Durban High Court placed it into provisional liquidation last week.
Auction Alliance chief executive
Rael Levitt, who has auctioned various liquidated developments in the past couple of years, said that the leisure property market was still under pressure but the difference was that investors now had a bigger appetite for the developments than they had three years ago.
This increased the chances of new developers buying the projects and successfully redeveloping them.
- Sake24
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