By Peter Egwuatu
In the midst of the financial and economic crisis, a South African based Property and Leisure company listed on the Nigerian Stock Exchange (NSE) is set to commence construction activity on a N105bn (US$676m or R5.13bn) development that will include an 18- hole golf course, a 5-star hotel and 420 villas along Tarkwa Bay in Lagos.
The company hopes to convert some of its existing debt to equity through a US$33m Rights Issue in October 2009.
This Lagos Keys project is expected to compliment the Eko Atlantic City project – a N405bn project on a 8km2 reclaimed land along the Bar beach, Victoria Island ( a Public Private Partnership initiative).
The launching of this project at a time like this confirms the attractiveness of the Nigerian real estate market.
Alitheiaca Capital has advised the PPGL to ensure that the land rights issues are proactively resolved to avoid the kind of tussle on the Banana Island. â€œCritical areas of dispute such as development control and physical planning should also be resolved ahead of the commencement of sale.â€added Alitheiaca.
Meanwhile, the companyâ€™s financial adviser, Goldbanc Management Associates (GMA)Limited hadÂ disclosedÂ to newsmen in Lagos thatÂ Pinnacle is awaiting approval from the regulatory bodies in the Nigerian capital market to float a rights issue which will commence by October31, 2009.
Speaking at a press briefing, Chief Operating Officer, Goldbanc Management Associates Limited, Mr. Kayode Tijani said, â€œ Pinnacle Point Group Limited would be issuing a total of R250 million Rights (about N4.750bn) , out of which R150 million (N2.850bn) has been picked up by ABSA, a major investor in South Africa , while the remaining R100 million (about N1.9billion)Â is to be issued to both existing and new investors.
He explained that the rights issue being issued by Pinnacle is unique in the sense that both existing and new investors can partake in the offer.
Tijani, explained that the proceeds from the rights issue would be used to undertake the Lagos Mega City projects, in which Pinnacle Group has been appointed asÂ the major property developer.
According to him, â€œ Because the company is listed in both Johannesburg Stock Exchange (JSE) and Nigerian Stock Exchange (NSE), both existing shareholders and prospective shareholders can participate in the offering. This is so because in JSE, the regulation allows for both existing and prospective investors to partake in rights issue. So we are using that leverage to allow our Nigerian investors who are not shareholders to buy into the company.â€
He further noted that the rights issue can be bought on the floors of the NSE, adding, â€œ Where an investor could not buy from the floors of the Exchange. The investor could approach GMA to get the rights issue.
According to him, â€œ 10 per cent of the companyâ€™s shares are held by Nigerians and the rights are domiciled in South Africa for now. Because of the dual listing of the companiesâ€™ shares , both existing and new investor can still partake in the offering as Nigerians are free to buy from either of the Exchanges. We, the financial adviser will help Nigerians who are not yet shareholders to partake in the rights. Even the Lagos State Government has stake in the company as the owners of the areas to be used in building the estates would be provided with job employment and made to own shares in the company.â€
Continuing , he noted , â€œ Existing voting pool agreement between major shareholders is to be cancelled, while existing loan from GMA of US$5 million must be converted to equity at same price as rights issue. Also, ABSA will furthermore convert existing debt of R70 million (about N1.330bn) to share capital at rights issue price.
In his own speech, Mr. Hennie Pretorius, Chief Executive Offer, Pinnacle Point Group Limited, said the company specialisesÂ in obtaining rights to develop vacant land and land development.
â€œ We focus on residential and leisure developments. Features of developments are family living, lifestyle, sports, golf, security and hotels. Our current business units comprise: Property development which is further subdivided into; leisure resort developments, Residential developments, Retirement developments, golf course ownership and management.Â All these are what we are going to provide in the Lagos mega city, including the building of Badagry Pyramid that will serve as a source of powerâ€ he stated.