The R9.7-billion sale of the Victoria & Alfred (V&A) Waterfront, the crown jewel of the South African property market, appears set to have a multimillion rand sequel in the high court. The Reserve Bank will be cited as a respondent if the planned high court action proceeds.
Neill Bernstein, the founder and president of New York-based property company Devland Holdings, and Swiss-based trust Bayliss, have sent a letter of demand to former V&A Waterfront joint owner Dubai World for advisory, consulting and broking fees.
The fees are allegedly owed by Dubai World and the new joint owners of the V&A Waterfront, listed property company Growthpoint and the Public Investment Corporation (PIC), which manages the Government Employees Pension Fund.
The V&A Waterfront transaction is still subject to certain conditions, including exchange control approval by the Reserve Bank to allow the proceeds of the deal to be repatriated.
Bernstein confirmed yesterday that an urgent high court application was “ready and pending” because the response they had received from Dubai World’s in-house counsel to their letter of demand was “bring it on and we’ll see you”.
He claimed Dubai World was technically insolvent with debts of $80 million (R540m) worldwide and any claim in the high court allowed the applicant to call for security of costs.
In this instance, the assets were moving offshore.
“The advice we have received from senior counsel is to bring the application, which we hope will not be necessary, and cite the Reserve Bank to prevent the funds leaving the country,” he said.
Bernstein said it wanted Dubai World to put up R240m in security for the court case.
“It’s a straightforward application for security of costs around a commercial dispute. There is no urgency thereafter if there is security of costs and it becomes pending litigation.”
Bernstein said its letter of demand jointly and severally involved three parties – Dubai World, Growthpoint and the PIC. Bernstein, who is a significant minority shareholder in Growthpoint, said summons had not been issued against Growthpoint.
Attempts to obtain comment from Growthpoint chief executive Norbert Sasse and the PIC were unsuccessful.
The joint acquisition of the V&A Waterfront, the biggest single property transaction in South Africa to date, from Dubai World and London and Regional Properties was announced in February.
Transnet controversially sold the V&A Waterfront site in 2006 for R7bn to London and Regional Properties, Dubai World and several black economic empowerment investors. - Business Report