A R1.2-trillion Libyan sovereign wealth fund has launched a hostile takeover bid for one of SA’s premier hospitality groups, Legacy Hotels, following a bitter boardroom fallout, putting a multibillion-rand property portfolio at stake with implications for funders.
Legacy Hotels, which has a sprawling property portfolio, was founded by SA’s celebrated hotelier Bart Dorrestein — it’s him and others that the Libyans target to buy out and control the group.
A subsidiary of the sovereign wealth fund, Ensemble Hotel Holdings, has approached the high court in Johannesburg seeking an order that a private auction be held in which it will bid to buy out Dorrestein and his associates’ shares in the firm.
According to Ensemble, the auction will be a two-way street, where Dorrestein and other shareholders will be given a chance to outbid them for control of the multibillion-rand property portfolio that stretches from Sandton to Namibia.
Business Day understands that this approach has caused concerns for Dorrestein as “it will be suicidal” to go on such an auction against a sovereign wealth fund, according to parties sympathetic to Dorrestein.
Ensemble owns 39.79% of Legacy Hotels, which owns 5 star establishments such as Michelangelo Hotel, the Michelangelo Towers, the Raphael, the DaVinci Penthouse Suites and The Leonardo, Africa’s tallest building.
Dorrestein’s investment vehicle Legacy Management Holdings (LMH) owns 40.84% and an entity called Swanvest has a 19.39% stake in the group. Swanvest is also controlled by Dorrestein.
Ensemble said its application was motivated by an “irretrievable” breakdown of relations between it, LMH and Swanvest.
Dorrestein is opposing the application, stating he does not agree with the manner Ensemble plans to sever ties that go back more than two decades.
Counter-application
To defend their interest, LMH and Swanvest have launched a counter-application, asking the court to allow it to repurchase the shares held by Ensemble in Legacy Hotels.
Both matters are still to be heard in court, with the parties not willing to disclose more details of dispute and origination.
Legacy Hotel’s board is made up of five people, three representing LMH and Swanvest and two representing Ensemble’s interests — making the breakdown in relations all the more pronounced. With a multibillion-rand property portfolio at stake, no side is willing to back down from the cash-generating business.
Legacy Hotel also owns two hotels in one of Cape Town’s biggest tourist destination, the Victoria & Alfred Waterfront, The Commodore Hotel and its sister establishment, The Portswood Hotel.
The group also owns two properties in Kruger National Park — Elephant Point and Kruger Park Lodge — and four properties in the Pilanesberg Game Reserve — Bakubung Bush Lodge, Bakubung Villas, Kwa Maritane Bush Lodge and Tshukudu Bush Lodge.
It has three properties in Gabon and Namibia, with other facilities located in Pretoria and the Drakensberg.
With the shareholders at each other’s throats, the group’s popular flagship property, The Michelangelo Hotel, has not reopened since closing its doors at the height of the Covid pandemic in 2020 — a “temporary closure” of more than two years.
One of the group’s newest buildings, The Leonardo, in 2019 eclipsed Carlton Centre as Africa’s tallest building. The property, built at a cost of more than R2bn, stands 234m tall.
Ensemble first invested in Legacy Hotels in 1999. Over the years Dorrestein, who is the hospitality group’s CEO, has had to fend off allegations that former Libyan strongman Muammar Gaddafi owned a stake in Legacy Hotels.
The investment in SA by the Libyan sovereign wealth fund has not been without its controversies over the years. In 2013, SA agreed to return assets and cash stashed in the country by Gaddafi, allegedly through the fund.
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