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Send  Share  RSS  Twitter  12 Jan 2011

INVESTMENT: Trematon Finally Gets Mykonos


Recent Western Cape Business News

CAPE TOWN-based investment company Trematon Capital Investments is now the out-and-out dominant shareholder in Club Mykonos Langebaan – managing to achieve this with a deal that looked anything but expensive.

In June last year Trematon pitched an offer of 200c/share to all shareholders of CML. Initial reaction was that the offer was on the ‘low side’, and that Trematon would be lucky to garner more than a handful of shares.

The outcome of the offer – announced last year – was, however, most surprising. Nearly 7000 CML shareholders that collectively held more than 17 million shares opted to take up Trematon’s cash offer.

What this means is that Tremgrowth – 100% owned subsidiary of Trematon, holds a powerful 81.7% stake in CML – which not only holds leisure property but a significant minority stake in the Mykonos casino.

This is a massive development, considering that previously Trematon was trying to hold sway at CML with only a 29.6% stake.

Trematon directors have indicated that the increased holding and the outright control of CML was expected to “improve the ability of the CML board to make beneficial long-term strategic decisions”.

One presumes these ‘decisions’ would revolve mainly around funding new developments at CML. To put it bluntly, Trematon would hardly want to put up primary funding for developments at CML with a relatively small economic interest in the West Coast asset (especially if other shareholders might not have been willing to stump up new funds as part of a rights issue).

One presumes Trematon, which has extensive property development experiences in its portfolio and between its board members, might look to ‘gearing’ up CML – perhaps not a bad idea in the current benign interest rate environment.

Naturally, building property development capacity to catch the next real estate upswing is a tricky business. CML has, of late, been somewhat subdued in line with a depressed West Coast property market and prevailing dour economic conditions.

In Trematon’s last set of interim results directors were rather curt in their commentary, noting that CML had performed according to expectations and that operating costs had been reduced as far as possible.

At that juncture Trematon reported that operating losses had been curtailed, and that - after the contribution from the Mykonos Casino – CML had made a small profit.

Of course, future profitability of CML remains heavily dependent on the market for coastal leisure property development.

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