Gershwin Wanneburg and Leila Samodien
2 September 2008
Cape Town — The foreign investors in the V&A Waterfront deal funded the BEE portion of the sale via a loan, but none of their local partners have made any payments on the multimillion rand debt, shareholders say.
Hassen Adams, a prominent Cape Town businessman, said the London- and Dubai-based investors had funded the BEE component of the R7-billion sale with the understanding that the BEE partners would repay them over five years with interest.
Details of the controversial deal, which gave birth to a joint South African-registered company known as Lexshell, have until now been sketchy. The BEE portion includes 11 individuals and investment groups.
Transnet has been reluctant to make the Waterfront sale agreement public, saying that it was a confidential document. It did reveal it last week to members of parliament's portfolio committee on environmental affairs and tourism after repeated calls for the agreement to be released.
Adams said he did not have details of the BEE aspects of it at hand, but that interest would have started accruing one year after the date of the sale in 2006.
"As far as I'm aware, absolutely no payment has been made to Transnet by the BEE shareholders. The 25 percent was funded by Dubai World and L&R (London and Regional). It was funded on the basis of a loan for a period of five years," said Hassen, who is one of the smaller BEE shareholders.
"They've given it to us at a good rate," he said.
Hassen, who is also the chairman of JSE-listed Grand Parade Investments, has a 0,1 percent stake in the 25,05 percent BEE holding in the Waterfront.
He said the BEE partners had been granted a "beneficial and discounted" interest rate by Isithmar and L&R that was "better than you could get from banks".
Shaun Rai, chairperson of the Cape Empowerment Trust, confirmed that the BEE partners had so far not made any payments to their foreign partners.
The trust has a 0,5 percent BEE stake in the Waterfront.
Rai said the trust had still not had any word from L&R or Isithmar about how the deal would be funded.
"We haven't really seen any documents regarding the funding structure," Rai said. "Normally empowerment groups are very involved in the funding structure, but in this case it's a question of major shareholders finalising their arrangements first."
Rai said the finer details of the bigger shareholders' ownership might have been delayed because of the speedy way in which the BEE part of the matter had been concluded.
He said that it had been wrapped up "within weeks".
The sale of the Waterfront has been surrounded by controversy from the start. First the DA accused former Western Cape premier Ebrahim Rasool of favouring Dubai World, the owners of Isithmar and the investment arm of the Dubai government, because of personal links to Dubai World.
Then there were reports last week in a Sunday newspaper that Transnet had promised the new owners land stretching from the Waterfront to Robben Island, including the seabed.
Transnet has vehemently denied those reports and last week DA MPL Robin Carlisle withdrew accusations that the Waterfront tendering process had been rigged.
Hassen said the storm surrounding the deal had discouraged investment.
One of Lexshell's lawyers, Hendrik Kotze, said he was not in a position to comment.
However, he would meet V&A Waterfront representatives this week to discuss recent media coverage of the contentious deal.
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