- WPRFU set to stage council meeting on Tuesday night that will seek to approve a loan agreement with Flyt Property Developers.
- The proposed deal would see the WPRFU partner with Flyt on the development of Newlands rugby stadium.
- The loan agreement has insiders at WP Rugby concerned, however, given that the union could put up R250 million worth of assets as security.
The future of Newlands rugby stadium reaches a pivotal moment on Tuesday evening when the Western Province Rugby Football Union (WPRFU) holds a general council meeting in an attempt to approve a major partnership with a Cape Town-based property developer.
The proposed deal with Flyt Property Investment would see WP receive a R112 million loan from Dream World Investments - a company within the Flyt group - that would be used by the union to pay off its outstanding debts to Remgro and Investec.
Flyt and the WPRFU would then be joint owners of a new company called Newlands DevCo that would be equally invested in the redevelopment of Newlands and any profits that come from that project, which is expected to take between three and four years to complete.
WPRFU president Zelt Marais believes that the deal will leave the union in a stronger financial position than was the case in their previous deal with Investec, where WP was set to hold just a 5% share in any profits generated from the Newlands development.
Investec had already paid the WPRFU around R50 million of the R110 million that was agreed on between the parties in a deal for the rights to develop Newlands, while the union also owes Remgro a reported R58 million.
The Investec deal with the WPRFU had collapsed by June 1, Marais has confirmed.
Insiders at WP, however, are gravely concerned that the deal comes at a great risk of placing the union under irreversible financial stress should things not go according to plan.
As security for the original loan, the WPRFU is proposing that it hand over the mortgage bonds of several of its properties to Flyt totalling R250 million.
Should the WPRFU not be able to pay back its loan within four years, or if for whatever reason it cannot fulfill its end of the deal in securing the building rights for the Newlands redevelopment or the funding of working capital, then it stands to lose those assets.
The potential deal has raised further concern from within the rugby community with the union's Brookside property set to be sold to another joint venture between WPRFU and Flyt - Brookside DevCo - for a fee of R23.15 million.
Brookside DevCo would then seek its own development rights for Brookside and the property would then be revalued and potentially redeveloped in the hope that the union could use it to boost cash flow for the next four years to help supplement the overhead costs for Newlands DevCo.
Tuesday's meeting will see the region's club heads come together and vote on the proposal, with a simple majority enough to see it passed.
A Special General Meeting will then be held on 8 July to further consider the proposal.