Rainbow Cup

WP Rugby in talks with 2 potential equity partners, denies being placed under administration

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WPPR chairperson Ebrahim Rasool and Stormers coach John Dobson during an online media briefing on 25 May 2021. (Photo by Ashley Vlotman/Gallo Images)
WPPR chairperson Ebrahim Rasool and Stormers coach John Dobson during an online media briefing on 25 May 2021. (Photo by Ashley Vlotman/Gallo Images)
  • WP Rugby is in talks with two potential equity partners, chairperson Ebrahim Rasool has revealed.
  • Rasool also insists the union is not placed under administration by SA Rugby.
  • He says WP and SA Rugby are involved in a "handholding exercise" to overcome short-term challenges.

Western Province could sign a deal with an equity partner in the coming months, chairperson of the union's professional arm, Ebrahim Rasool, revealed on Tuesday.

The Cape union recently made headlines when it turned down a deal with American consortium, MVM Holdings, who subsequently bought a majority stake in WP's coastal rivals, the Sharks.

But the top brass of Western Province Professional Rugby (WPPR), of which Rasool is the chair, has been hard at work behind the scenes to secure a deal.

While addressing reporters in a virtual media briefing on Tuesday, Rasool said they were in discussions with two potential investors.

"We are on the verge of having detailed negotiations with two potential equity investor partners who are global concerns. We have signed non-disclosure agreements with both of them. They are already starting the process of, in legal terms discovering, and financial terms due diligence... we are asking their records, they are asking our records," Rasool said.

"We are now at that point of the engagement and I think that we are hoping that the marriage could take place within the next few months, depending on which suitor is best for our franchise and our brand."

The union has also been searching for a new CEO since Paul Zacks resigned in January last year.

Rasool, though, said the search for a new CEO was temporarily suspended as negotiations with the potential investors continue.

"The implication of entering these negotiations with equity partners is that at least one of them have indicated that should they be successful, they have their own CEO that they either second from other parts of their business, or they have other ways in which to look at who runs the business," Rasool said.

He continued: "So, for us it will be [about] who will look after the rugby, who will look after the culture of rugby... for them it is how to make Western Province a profitable business based on the strength of its brand. They want to assess whether we are underperforming in terms of our brand and whether we can even enhance the performance based on our brand. And that is the kind of calculated brain that they want to bring to the CEO position.

"In light of that goodwill that we want to show the equity investor, and in the light of not wanting to enter into a financial long-term commitment to a CEO that we may have to pay out for the duration... if we have this we thought it would be prudent financially and in terms of good negotiation practice to suspend, not to end, the process of searching for a new CEO, see where these negotiations are going, and then if necessary, in concurrence with the potential investor, or in pursuing our own needs, to then pick up the process again."

Not under administration

Rasool also responded to reports that SA Rugby had stepped in to take administrative control of the cash-strapped union.

He denied the union was under administration, saying it was rather "engaging" with SA Rugby.

"I think that is the central decision that was taken (at a board meeting last Friday). I think the board has also had to absorb our engagements and discussions with the South African Rugby Union. We have indicated previously that we are engaged with them. We are not yet at the outcome part of it, but what I can say is that SARU came in with a request from certain clubs that Western Province Rugby should be placed under administration.

"The engagement so far has convinced SARU that that is a completely inadequate, unfounded and unneeded step to be taking... and that we are indeed solvent, like all other franchises across the country, we do face challenges, and therefore we will be engaged in a handholding exercise to overcome some of these short-term challenges that we do face."

But on relinquishing complete control of the union's affair to SA Rugby, Rasool was steadfast.

"There is no administration, what we do have is a co-operation between Western Province and SARU. Secondly, they were convinced of this because we have been able to re-sign key sponsors. They are encouraged by the negotiations with these potential equity investors, and thirdly, they have been privy to the audited financial statements and all of that convinced them that they should not act in a precipitate way in dealing with Western Province Rugby, but in a cooperative way.

"And I want to say, from our side, we welcome that. It is not seen as an imposition, it is seen as allowing SARU a glimpse into the challenges we face and therefore enlisting their expertise and help as we go forward."

Reports added that this committee overseeing matters of the union consisted of six members - three from SA Rugby and three from WP.

On this, Rasool commented: "The persons referred to will look at the property situation in Western Province Rugby. I want to agree that we need that expertise from SARU because we admit that we have moved from one low to another, from one property deal to another and it's time to cut through that and to say 'let us get a sustainable management of the assets of Western Province Rugby. Let us get an outside and objective opinion about what is the best'.

"I believe the stars are aligned... as soon as SARU says who their three people are... we would be able to commence with negotiations and the options are on the table for us but I think we want to do this in tandem with SARU."

It is believed that Rasool, Western Province Rugby Football Union (WPRFU) president Zelt Marais and either deputy president Moneeb Levy or vice-president Ronald Bantom would be representing the Cape union on this committee.

Financial woes

It is no secret that the WPRFU is in financial strife - it faces huge damages claims after attempting to withdraw from an agreement with Flyt Property to redevelop Newlands Stadium.

Dream World Investments - an associated company within the Flyt Group - in March filed formal papers on WPRFU in the Western Cape High Court to recover a loan amount of nearly R112 million and interest.

On these matters, Rasool commented: "There's a handholding exercise on the short-term liquidity issues. The property is the major issue where SARU would not like us to get into long-term decision-making without that kind of oversight.

"And the six-person committee will be able to do that. There are, like with all franchises, short-term liquidity challenges that we must be very prudent about. But I do believe the six-person committee is confined to the property-related issues."

On the pending court case, Rasool said they've "laid all the cards on the table" with SA Rugby.

"There is a potential for a settlement on the one side and a potential for a more sustainable deal on the other side. But we want to put all of that into the discussion with SARU and get the kind of external advice that is required for an objective, sustainable long-term decision."

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