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CANHAM’S BID TO STOP SALE OF 3 SUN HOTELS

26/09/2022 08:55:00 Stanley Khumalo

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MANZINI – An effort to stop the sale of the three hotels under Sun International Management Limited by Canham Mining International (Pty) Ltd has fallen through.

It was gathered that Canham Mining International (Pty) Ltd had written to the liquidators, seeking that the sale of the three hotels, which are SwaziSpa Hotel and Casino, Lugogo Sun, and Ezulwini Sun, be stopped as they had a contract with them. It was gathered that Canham Mining International (Pty) Ltd had sought that the matter be sent to arbitration and as such, suggested senior legal professionals for the arbitration, failing which the Law Society should appoint the arbitrator.

Agreement

Initially, a sale agreement had been reached between Canham Mining International (Pty) Ltd and Manzane Estates Limited-Ezulwini Properties Limited in Liquidation for the sale of SwaziSpa Hotel and Casino, Lugogo Sun, and Ezulwini Sun, following the liquidation of five companies under Sun International Management Limited. Canham had agreed to buy the properties in a deal that was signed in Matsapha and Sandton on May 24, 2022. The parties agreed on a price of E782 601 571, with a 10 per cent deposit due within two days of the signing of the agreement.

However, Canham was unable to fulfill the agreement. The buyer defaulted on the deposit and the final balance, the latter due within 45 days after the signing of the agreement. The liquidation committee’s lawyer, Nkosingivile Dlamini, said the deal fell through after Canham defaulted on the agreement.

Shareholders

He said they were left with no choice but to come back and report to the shareholders and creditors on the fate of the deal, and also to seek their guidance on a way forward. Subsequent to these developments, Dlamini was sought for comment following the collapse of the deal with Canham Mining International, shareholders and that creditors had agreed in principle that the sale of the three hotels under Sun International Management Limited be restarted. Dlamini was asked to outline the status of the sale currently and what was being done by the liquidators to put it to finality. He was also asked if the sale would now be conducted through an auction and if yes how? He was also informed that this publication had gathered that Caham Mining International (Pty) Ltd was claiming that it had a contract of sale (with the liquidators). Dlamini was requested to outline their (Caham Mining International (Pty) Ltd) bone of contention and the response by the liquidators as this publication had gathered that they wanted that aspect (alleged dispute about the contract) to go on arbitration.

In response, the liquidators’ lawyer said the liquidators were mandated by the body of creditors and members to issue a second request for proposal (RFP). He said: “They were required to broaden the scope of the advertising to South Africa and abroad. The Liquidators will therefore be putting up the properties by way of private treaty with the assistance of external experts in disposal of assets of such magnitude.” Dlamini said Canham Mining International (Pty) Ltd was under the impression that the sale entered into with his company was still valid though the company failed to perform as per the terms of the agreement which did not come into full effect as the conditions precedent were not met. He said the liquidators have therefore indicated that they would not participate in any purported arbitration that emanated from an agreement that never came to life.

Creditors

It is worth noting that on August 26, 2022, this publication reported that shareholders and creditors of Sun International Management Limited had taken a resolution that the process should be restarted, with RFPs (requests for proposals) advertised both locally and in outside markets, specifically the Republic of South Africa, to expand the search for a buyer.
It was reported that the RFPs would be for both movable and immovable assets. Co-Liquidator, Paul Mulindwa was quoted outlining that assertions that the sale process was private had been misguided because the RFPs were advertised extensively in the local press. He said any interested party could have come forward with a bid. There remains a need to expand the process to South Africa, Mulindwa said, so that a vast market can be accessed.

The co-liquidator said if one were to be honest, there was only one institution in the country that was positioned to raise E500 million and up to E1 billion as the market was very small, and had limited the entire process. He said should the restarted process fail, it may be necessary for the parties to consider re-visiting unsuccessful bidders from the first round to see if they could increase their bids in order to close a sale. He said if that failed, the liquidators may have to go to a public auction as a last resort. In the initial bidding, other than Canham Mining International (Pty) Ltd were Eswatini National Provident Fund (ENPF), Yeoman Properties (PTY) Ltd, WZN Investments (Pty) Ltd and Africa Orbit Holdings (Pty) Ltd.

According to a report of the master of the High Court, compiled by the co-liquidators, Marisa Boxshall-Smith and Paul Mulindwa on April 22, 2022, the Creditors Committee ranked the bidders. On top of the list was Canham Mining International, followed by ENPF, Yeoman Properties, and WZN Investments. Africa Orbit Holdings came last.

Liquidation

The sale agreement between Canham Mining International (Pty) Ltd and Manzane Estates Limited-Ezulwini Properties Limited in Liquidation was signed on May 24, 2022. The agreement stated that Canham Mining International (Pty) Ltd shall, not later than 45 days from May 27, 2022; furnish the conveyancers with an unconditional and irrevocable bank guarantee in favour of Swazi Spa Holdings and its subsidiaries from a commercial bank registered in Eswatini, for payment of the balance as approved by the seller. Dlamini (liquidators’ lawyer) said Canham failed to fulfill the agreement even after an extension was granted to the end of July 2022.