Western Cape Business News

Send  Share  RSS  Twitter  03 Jul 2011

PROPERTY: Boschendal To Change Hands Again


Recent Western Cape Business News

BOSCHENDAL, the famous wine farm and leisure development in Franschoek, looks set to change hands again.

CBN believes the iconic wine farm – once owned by mining giant Anglo American – is on the negotiating table after major shareholders IFA Holdings (a Middle East-based leisure property developer) and JCI (the former mining house that sat in the late Brett Kebble’s camp) both issued cautionary announcements.

JCI holds a 62.7% stake in Boschendal, which ranks as the company’s only remaining asset. IFA holds the balance of the shares after recently upping its stake in Boschendal by a further 5% to 37.3%.

All things considered one might reasonably presume that IFA might be buying out the controlling stake in Boschendal held by JCI.

After all JCI, early in 2011, issued an announcement to shareholders stating that the company “required cash urgently in order to meet outstanding liabilities and ongoing operating costs, including salaries and wages”.

Consequently JCI was forced to take a R8 million in further loan funding from specialist bank Investec, which is a major shareholder in the company. Obviously the loan was secured by JCI’s investment in Boschendal – which, unfortunately for JCI is still in its early stage of (re-) development and not meaningfully generating cash flows.

If JCI is selling out of Boschendal then it’s stake would fetch between R120 million to R180 million if CBN assumes – based on the most recent transactions – that the wine estate carries a valuation of between R200 million to R300 million.

But CBN wonders whether IFA Holdings – which has market capitalisation of R78 million and other developments on its books – has the capacity to acquire JCI’s Boschendal stake.

Certainly IFA’s last set of interim results don’t suggest IFA has a surfeit of capital with which to fund a major transaction. The bottom line is that the company would have to borrow extensively to buy out 100% of Boschendal.

And then there is the funding for development at Boschendal to consider.

CBN has previously reported that development plans for Boschendal’s 2240 hectare estate included residential homes set within villages of varying size, an upmarket retirement village, a boutique hotel and a mixed-use precinct combining shopping, offices and apartments.

If it’s not safe to assume that IFA is buying out JCI’s stake in Boschendal then what could the alternative possibly be?

Business magazine Finweek has speculated that Randgold & Exploration, a former Kebble controlled mining company that now has Investec as a major shareholder, could be buying out both JCI and IFA’s stake.

To CBN such an arrangement sounds like an Investec master-minded deal. It’s far fetched, but Randgold & Exploration, intriguingly, is also trading under a cautionary.

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