WPRFU agree to sell property shares to assist with 'cash flow'

By Jan de Koning

Thursday 12 Aug 2021

NEWLANDS UPDATE: The Western Province Rugby Football Union has agreed to sell its share of the Sports Science building, neighbouring the Newlands Stadium, to free up some much-needed cash.

At a querulous and at times dyspeptic council meeting - first started in July and twice postponed because infighting prevented constituents from reaching an agreement - it was agreed on Wednesday to sell the three percent share in the building for just over ZAR17-million.

While the council eventually voted in favour of selling off the WPRFU share, the vote count clearly indicates that it was not a universally popular decision.

Of the 71 votes cast (there are 90-odd clubs in the union), 42 voted in favour of selling the shares, 27 voted against and two abstained.

The need for additional funds is to assist the company, WP Professional Rugby (Pty) Ltd, with its troublesome cash flow issues.

WPPR, the professional arm of WPRFU, has a ZAR9-million shortfall for August - which could impact its ability to pay the salaries of staff, players and coaches.

So far WPPR has been able to meet all its financial needs, but there is a need for some urgent 'additional cash'.

Freeing up the additional ZAR17-million will certainly assist the short-term needs.

Three parties jointly owned the shareblock of the building - the Sports Science Institute of SA (with 40 percent), UCT (57 percent) and WPRFU (three percent).

The American company Nantworks - which is involved in research and development in bioscience, and particularly vaccine development and manufacture - wants to obtain the remaining 70 years of the 99-year lease on the land and then develop the building for its own purposes.

Nantworks made an offer to SSISA for 100 percent of the lease shares. SSISA, in turn, will purchase the UCT and WPRFU shares and sell on to Nantworks.

Apart from the vote to sell the SSISA building lease shares, the WPRFU council also had another very important vote on Wednesday.

The council also had to vote on the proposal that WPRFU form a 'hand-holding' partnership with SA Rugby - or a 'Joint Oversight Committee'.

Formed in response to a request from about 15 of the union's senior clubs - who were concerned over the administrative blundering that caused extreme financial challenges for WPRFU - the committee will 'assist' the union to address the challenges that are significantly impacting short, medium and long term solvency and financial stability.

At this stage, SA Rugby does not intend to invoke the full application of article 28 of the SA Rugby Constitution and therefore WPRFU is not being placed under administration.

However, SA Rugby's 'oversight' role makes it clear the concerns are serious.

The same clubs that voted against the sale of the Sport Institute shares, voted en masse in favour of SA Rugby's oversight role - a clear vote that they have no confidence in the Zelt Marais-led executive committee.

In the vote 55 were in favour of SA Rugby's oversight role and just nine - all hardliner Marais supporters - voted against it.

That is 86 percent of the clubs that voted that showed their disapproval of Marais' executive - in stark contrast to the less than 60 percent that voted in favour of the Marais-driven sales of the shares.

That vote was also cast in controversy, with a large block of clubs unable to ask questions and some allowed enter into the virtual meeting at a late stage - just in time for the vote.

Some clubs objected vehemently about their voices being silenced and peoples' microphones being turned off by those in control of the virtual meeting.

That is also why the clubs voted so strongly in favour of the SA Rugby oversight role.

The terms of the agreement for the committee states clearly that if "WPRFU or any member of the WPRFU Group does not, or evinces an intention that it will not, follow the recommendations of the committee, SA Rugby reserves the right to terminate the existence of the committee by notice in writing to WPRFU and, in such circumstances, to terminate these Terms of Reference, without prejudice to any rights SA Rugby may have accrued under these Terms of Reference or under the SA Rugby Constitution.

The collaborative effort between WPRFU, WPPR and the national body, SA Rugby, could result in a “settlement” with the Flyt Property group.

Dream World Investments, an associated company within the Flyt Group, filed formal papers on WPRFU in the Western Cape High Court in March to recover a loan amount of ZAR113,130,482.01 (being the Loan Amount, plus interest), ZAR1,265,000.00, being the raising fee in terms of the Loan Agreement, plus interest, and the sum of ZAR30,156,585.41 as and for damages "in a sum equivalent to the Development Charge of 30 percent of the Loan Amount".

It is believed a new player in the game, the Stellenbosch-based company Staytus Cape (Pty) Limited, has already made an offer to settle with Flyt/Dreamworld in order to regain control of all the WPRFU properties that were bonded as security for the loan from Dreamworld.

However, that settlement amount has ballooned to over ZAR200-million - a loss of about ZAR50-million, while the Marais executive engaged Flyt/Dreamworld in costly legal battles over terms and amounts owed,

With the much-vaunted Junaid Moerat legal battle due back in court later this month, the legal bills are mounting at an alarming rate.

In June Moerat and his lawyers were successful in getting an interdict against the Marais-led WPRFU, after filing an urgent application in the High Court of South Africa: Western Cape Division.

Moerat, a former candidate for the CEO position of the union’s professional arm (WP Professional Rugby Pty Ltd), was suspended in February this year.

Moerat’s lawyers had challenged the legitimacy of the disciplinary process and after a breakdown in communication between the two parties turned to the high court to prevent the hearing from going ahead.

Judge Andre le Grange ruled in favour of Moerat – who was represented by Shaheid Schreuder and advocate Ross Randal.

Randal Titus represented Marais and the WPRFU.

The Judge, Le Grange, in his ruling said: “… the responded is interdicted from taking any further steps/prosecuting the disciplinary proceedings instituted against the applicant by the respondents on 17 February 2021.”

The hearing of the case – whether the process is legitimate or not – has been placed on the ‘semi-urgent’ roll for Thursday, August 26.

The cash-strapped WPRFU has already spent more than ZAR3-million in legal fees in previous two years – ZAR940,051 in 2019 and ZAR2,195,340 in 2020.

@rugby365com can reveal that the WPRFU legal bill for 2021 has already amounted to about ZAR3-million - in the first six months.

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