The continuity of black economic empowerment (BEE) shareholdings in assets sold by the state has become a problem regarding the state’s sale of Aventura resorts for R200m way back in 2003.
The problems surrounding the sale of the state-owned holiday resorts to the private sector have been ongoing for about 10 years and were again raised by department of public enterprises officials in a briefing on Wednesday to the National Council of Provinces select committee on communications and public enterprises.
The department is trying to secure a BEE transaction for the company that bought eight Aventura resorts from the state.
Forever Siyonwaba Consortium bought the resorts, with 30% of the shares being held by Siyonwaba Leisure and the remainder by Forever Resorts SA, a company owned by a US limited liability company which at the time operated resorts worldwide. Forever Resorts SA currently operates 20 leisure and corporate destinations in Gauteng, Mpumalanga, the Free State and the Western Cape.
Siyonwaba Leisure, a 100% black-owned consortium made up of the Izinyoni Consortium, the Research and Security Development Trust and the Siyonwaba Consortium, sold its 30% stake in 2008 for an estimated R60m to Forever Resorts after the expiry of the five-year lock-in period of ownership.
Siyonwaba’s 30% was not sold to another BEE partner.
The department’s director, Denzel Matjila, told MPs that while Forever Resorts undertook to sell the 30% to another BEE company, this had not happened. He said the company told the department in 2010, in response to departmental inquiries, that efforts were underway to put in place a new BEE structure and that the 30% shareholding would be transferred to a trust whose beneficiaries would be employees.
However, Forever Resorts insisted it was not obliged in terms of the agreement of sale and purchase to on-sell the 30% Siyonwaba stake to another BEE partner.
Matjila said Forever Resorts had explained that its plan to introduce a BEE partner was constrained by unresolved land claims over some resorts and the consequent uncertainty over the final make-up of its asset basket. He said the department’s attempts to resolve the issue and to establish Forever Resorts’ obligations had been frustrated by a lack of access to shareholders’ agreements.
Employees have also complained that the promised employee share ownership plan – which was not provided for in the sale and purchase agreement – had not been implemented by the new purchaser. They also accused the government of not protecting their interests.
Former and current employees of Forever Resorts want to establish a broad-based black economic empowerment entity which Matjila said could be assigned the contested 30% BEE equity stake.
Forever Resorts legal adviser Thelara van Staden said the department misconstrued the true nature of the transaction between Aventura, Forever Resorts and government in 2003.
She said that in terms of the sale and purchase agreement there was no contractual obligation for Forever Resorts Aventura to obtain another BEE partner after the five-year lock-in period for Siyonwaba.
“Nevertheless, cognisant of the policy objectives of government regarding BEE, and to which Forever Resorts Aventura fully subscribes, Forever Resorts Aventura subsequently communicated to the department of public enterprises its plans to introduce a new BEE partner.
“However, those plans have yet to be implemented. They have been held in abeyance for a variety of reasons, among them the uncertainty of the final make-up of the asset basket of Forever Resorts Aventura on account of the numerous outstanding land claims. In this regard, Forever Resorts Aventura continues to evaluate its position on an ongoing basis and will make a decision at the appropriate time.
Van Staden said the sale and purchase agreement was made available to the department, and "our alleged unwillingness" to do so was untrue.
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