Row erupts over plan to buy conference centre

2011-07-09 09:04

Another major row has broken out at the National African Federated Chamber of Commerce and Industry (Nafcoc) this time over a plan to acquire the Gallagher Convention Centre in Midrand, north of Joburg.

At the heart of the dispute are some of Nafcoc’s leaders who believe that while the acquisition is a good idea, the asking price of R500?million is R110?million more than they should pay for it.

Nafcoc intended using the R500?million worth of preference shares it holds in hotel and casino group Tsogo Investment Holdings to acquire one of Africa’s largest conference and exhibition centres from Hosken Consolidated Investments (HCI), which is also a Tsogo subsidiary.

Daniel Mbuli, spokesperson for one Nafcoc faction, said the deal meant that HCI would exchange the R500?million preference shares for the convention centre, which is worth only R390?million.

He said: “Nafcoc is being ill-advised on the deal because HCI will get a discount of R110?million for the chamber’s preference shares.”

Nafcoc currently has an agreement with Tsogo Investment Holdings in terms of which Nafcoc’s 17 trusts will receive R40?million per year in dividends for the next six years.

“Should the preference shares be sold to Nafcoc, it would mean that the Nafcoc trusts will no longer receive the dividends. So the deal is bad for Nafcoc as the chamber will lose big money,” said Mbuli.

The squabble over the Gallagher Convention Centre forms part of the war for Nafhold’s – Nafcoc’s investment wing – billions.

Last year, Nafhold divested R1.2?billion from Tsogo Investment Holdings.

While R500?million of the money was invested back into Tsogo, the remaining R700?million is being disbursed to ordinary Nafcoc members.

The first phase of the disbursement was carried out in December last year and the second phase should have been rolled out in February, but was delayed after Nafcoc took Nafhold to court to interdict the cash distribution process.

The second phase is now expected to be implemented in a few weeks’ time.

Mbuli said: “Our fear is that Nafcoc is going to lose a whopping R110?million if the deal goes through and we as the trustees cannot be held liable for the loss.”

Nafcoc spokesperson Vukile Mathabela declined to comment on the matter, saying: “Nafcoc does not have any comment.” But when pressed for comment, he said: “This means we neither confirm nor deny that there is a plan to buy Gallagher Estate.”

City Press is in possession of documents in which HCI offers to sell a company that owns Gallagher Convention Centre to Nafcoc. Gallagher Convention Centre has recently hosted high-profile conferences including that of the ANC Youth League, labour federation Cosatu and the Black Management Forum.

However, a source at Nafcoc confirmed the plan, saying: “I do know that there is a plan to acquire Gallagher Estate.”

Nafcoc has now roped in a consultancy called Nation Advisory Services Limited to help pull the deal together.

In the documents obtained by City Press, HCI explains how the deal will take place: “We refer to the recent negotiations between ourselves and Mr Lwazi Koyana of Nation Advisory Services regarding the above matter, and are pleased to advise that we are now in a position to make a firm offer to each of you.

“HCI Treasury Limited, a wholly owned subsidiary of Hosken Consolidated Investments Limited, hereby offers to acquire from each of Nafcoc Trust all of the cumulative redeemable non-participating preference shares, cum dividend in the share capital of Tsogo Investment Holding Company, in exchange for one-for-one basis in Silver Vanity Investments.”

Silver Vanity Investments – an HCI subsidiary – owns the Gallagher Convention Centre.

Initially, HCI had given Nafcoc until June 20 at 5pm to accept the purchase offer, but the talks are still ongoing.

HCI chief executive John Copelyn’s personal assistant promised to get him to return City Press’ call. But Copelyn had not done so by the time of going to print.

Should the deal go through, Nation Advisory Services will appoint a structural engineer to inspect all buildings owned by Silver Vanity Investments.

HCI’s plan to offload Silver Vanity Investments comes after a 2005 ruling by the Competition Tribunal which stated that it was anti-competitive for HCI to own both the Gallagher and Sandton convention centres.

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