The Western Province Rugby Football Union's (WPRFU) partnership with property developers Flyt Property Investment has now been 100% confirmed.
This follows a special meeting on Wednesday night where the plans were given a final stamp of approval.
WPRFU president Zelt Marais confirmed the news in a statement on Wednesday evening.
It means that the WPRFU will now receive a R112 million loan from Flyt which will be used to pay off its combined debt to Remgro and Investec.
More significantly, the WPRFU and Flyt will form a new company called Newlands DevCo that will be tasked with facilitating the development of Newlands rugby stadium. WPRFU and Flyt will be joint-50% shareholders in Newlands DevCo and any profits made off the development.
The partnership also confirms that the Brookside development will go ahead with WPRFU and Flyt forming Brookside DevCo which will operate in much the same way as Newlands DevCo with profits from future developments shared.
Marais has received significant criticism over the Flyt deal, largely due to the fact that the union has put up R250 million of its property assets as security should it not be able to pay back the loan within four years.
In a letter to the Daily Maverick, Marais explained the need for WPRFU to use its property assets as part of the deal.
"Like any loan agreement, WPRFU was required to provide security in the form of most of our properties, at values that reflect South Africa’s current economic climate, depressed property market and risks associated with Covid-19," he wrote.
"An independent valuation of all the properties will take place in one year’s time, and each year thereafter. This could make it possible for some of the properties to be released as a security arrangement that has been built in as a safeguard for the WPRFU’s benefit.
"Even though these properties are used as security for the loan, we can still develop them for our benefit and are currently negotiating with other developers in this regard."
Marais believes that the deal with Flyt, unlike the previous Newlands development deal with Investec which fell through on June 1, will place the union in a stronger financial position in the years to come.
Full Zelt Marais statement:
"I am pleased to announce that the Western Province Rugby Football Union (WPRFU)’s determined efforts to put the Union on a stable financial footing received a resounding vote of confidence tonight after the WPRFU’s agreements with Flyt Property Investment was agreed to at a Special General Meeting.
"The loan and development partnership with Flyt Property Investment means that we can now move forward in an exciting new chapter for Western Province Rugby and the many clubs that are part of our community.
"Tonight’s decision is further endorsement of the vote taken by the Council of the WPRFU last week when it voted in favour of the new deal by an overwhelming majority. Critically, the partnership with Flyt Property Investment will enable the WPRFU to settle its R112 million debt with Remgro and Investec, and plan for a sustainable future for our Union.
"We will now move forward with incorporating two new companies - Newlands DevCo and Brookside DevCo – as equal partners with Flyt Property Investment. These companies will focus on obtaining development rights for the DHL Newlands Rugby Stadium and Brookside properties, and the WPRFU will take an active role on the board directors of both companies and in sharing our plans and vision for the development of both sites.
"Significantly, tonight’s decision also gives us the greenlight to finalise negotiations with the City of Cape Town to become the anchor tenant at the currently under-utilised Cape Town Stadium. It is envisaged this will bring in much needed revenue into the City’s coffers for many years to come that will benefit of all Cape Town residents.
"We look forward to staging our first rugby match at the world class stadium in the near future and re-igniting the ‘gees’ felt by rugby fans across the City and province during the Soccer World Cup in 2010. As part of our plans for the future, we recognise that Newlands stadium holds a special place in the hearts of rugby fans, and in the history of the sport. We plan to pay homage to its rich heritage over the coming year, with a special event and permanent tribute at the stadium, so it is always remembered.
"These plans will be shaped by the ongoing response to the COVID-19 pandemic. There has been a lot of uncertainty over the past few months on the future of Western Province rugby. Tonight’s decision provides the WPRFU with significantly more control than previous agreements.
"The decision ensures the WPRFU is able to use its property portfolio for sound and sustainable economic benefits and puts us on a firm financial footing moving forward. The WPRFU looks forward to the many benefits we’ll be able to deliver to our local players, clubs and communities through our work with Flyt Property Investment. Together, we will ensure the ongoing sustainability of Western Province rugby towards even greater heights."
- Compiled by Lloyd Burnard