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CAPE TOWN-based investment company Trematon has launched a bid to gain outright control of West Coast leisure asset Club Mykonos Langebaan.
Trematon – as previously reported in CBN – has already gained ‘board control’ of CML via an existing 34.61% stake in the company.
It would seem Trematon – which recently sold off its stake in Cape-based Ingenuity property – is keen to secure a shareholding of at least 50% in CML.
CBN understands that Trematon would be happier with a bigger economic stake in lieu of the fact that the investment company would probably have to play a leading role in securing funding for any future developments at CML.
While property development has stalled at CML (as prices remain depressed), there is no doubt loads of long term potential that can be unlocked from new real estate ventures.
Of course, one also has to remember that CML holds a strategic stake in the Mykonos casino – which, if rumours are to be believed – could soon be pushing for licence in the larger Cape Town area.
The mechanics of the bid sees Trematon offering CML shareholders 200c/share. The bid values CML at roughly R70 million.
While some CML shareholders have indicated a willingness to hang onto their shares, an official notice from CML warns that “substantial additional long-term capital would be needed to develop and realise beneficially the value inherent in the land asset”.
CML says further that development of its real estate assets would require ‘materially’ increased borrowings from financiers or a combination of financing and a rights issue to shareholders.
“Any such development would be of a long-term nature as the property market in the area is currently subdued and entails risk.”
CML stresses the general outlook in the property environment appears uncertain and the availability of debt finance is likely to remain restricted for the foreseeable future.
It is also unlikely that any dividends would be paid during the currency of any such development. CML believes many shareholders (and there are 7 000 shareholders in CML) may not support a rights offer or want to take on the risk of increased borrowings.
While many CML shareholders might opt to ‘hang on’ in order to see what Trematon’s plans are for the future, the cash offer does purportedly represent an increase of 60% on the ‘known’ market price of CML shares.
Until 2005 there was no trade in CML shares. Since then informal ‘over the counter’ trading has taken place, but the contraction in the property market had seen the marketability and the market value of CML shares substantially decreased.
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