- Flyt Property Investment is claiming "damages" from the Western Province Rugby Football Union over reneging on an agreement
- Flyt says the claim arises from the WPRFU's "repudiation and breach of the binding agreements" it signed in June 2020.
- At the time, WPRFU president Zelt Marais called the successfully concluded transaction "the deal of the century".
Flyt Property Investment is claiming "damages" from the Western Province Rugby Football Union (WPRFU) over reneging on an agreement signed earlier this year.
Flyt CEO Zane de Decker said in a statement on Thursday that the claim arises from the WPRFU's "repudiation and breach of the binding agreements" it concluded with the company in June.
"Today, Flyt Property Investment and an associated company Dream World Investments ('the Flyt Group') formally lodged a claim with the Western Province Rugby Football Union for damages," De Decker said in the statement.
The deal was being struck for the intended development of the Newlands rugby stadium and other properties owned by the WPRFU.
In the statement, Flyt says the WPRFU approached them seeking a R112-million loan to settle looming debts and to conclude a development agreement in June 2020.
This was just 30 days before its existing outstanding repayment obligations to Investec and Remgro for R112 million were due.
The steps taken by Flyt are due to the WPRFU apparently seeking a way out of the deal, despite the union's president Zelt Marais calling it the "deal of the century" in June.
The statement continues:
"The Flyt Group's strong balance sheet and ability to fund a deal of this magnitude without bank finance - and the associated delays - meant that it could move swiftly to consider advancing the funds that WPRFU was seeking.
"The Flyt Group and WPRFU's legal teams and advisors worked 24/7 during June to negotiate a deal that suited both parties. It is well known that the development transaction between WPRFU and the Flyt Group that was validly concluded in July 2020 would use the WPRFU assets, including the land on which Newlands rugby stadium and Brookside rugby club are situated, more efficiently for the Union’s short-, medium- and long-term economic viability. Critically, the concluded deal would provide the WPRFU with a much-needed and sustainable financial lifeline as a 50:50 partner in all economic benefits derived from the development in the future.
"WPRFU president Zelt Marais called the successfully concluded transaction 'the deal of the century'. It therefore comes as a surprise that the WPRFU now appears to be seeking a way out of the deal that it sought and on a land value which it determined, which was also concluded after a comprehensive and transparent approval process.
"WPRFU and the Flyt Group concluded valid agreements on 10 July 2020 after all required WPRFU forums supported the deal by an 'overwhelming majority'. The WPRFU's financial advisors presented a comprehensive analysis to the various decision-making bodies of the Union that approved the transaction. This included the Council on 30 June 2020, the Union on 8 July 2020, the Executive Committee on 8 July 2020, and the Trustees on 9 July 2020. The entire process was overseen and guided by the WPRFU’s legal team at STBB, its auditors BDO and its professional advisory team.
"The Flyt Group has met all requirements of the agreements to date. These include the payment of the R112-million secured loan to WPRFU; the incorporation of the Newlands and Brookside DevCos; and the appointment of a board of directors for both companies.
"Despite compliance by the Flyt Group with the agreements concluded, the WPRFU has inexplicably chosen to replace STBB as its legal advisors with a new litigation attorney, and has deliberately reneged on the transaction. The WPRFU has done so by now objecting to the agreed land value forming part of the substance of the transaction, and through its conduct is acting in flagrant disregard for the binding nature of the agreements.
"It is important to point out that the land value agreed on was proposed by the WPRFU, not the Flyt Group. This value has subsequently been incorporated into the Newlands and Brookside DevCo’s that are co-owned by the WPRFU and the Flyt Group. To demand that the price be increased six months after the deal has been concluded is simply outrageous.
"The Flyt Group has taken comprehensive legal advice from senior counsel, and is assured of its rights under the agreements duly concluded with the WPRFU. Accordingly, the Flyt Group will now institute a claim for damages under the agreements as it is entitled to do.
"The Flyt Group is in the process of quantifying its considerable damages which, in addition to its direct costs, will include the losses sustained as a result of the lost opportunity to develop both the Newlands Stadium and Brookside property as the parties intended.
"The Flyt Group had looked forward to working with the WPRFU to co-develop the Newlands and Brookside properties and in this way support the Union’s commitment to bolstering rugby in poorer communities and ensuring a sustainable future for Western Province rugby.
"However, if WPRFU fails to compensate the Flyt Group for its damages, it will have no choice but to approach the appropriate forum for relief to compel payment. This will include calling up the secured loans that the Flyt Group holds over the Newlands stadium and other properties."
- Compiled by Sport24 staff