WP Rugby’s ‘deal of the century’ implodes

A lengthy statement issued by Flyt reads as follow:

‘Today, Flyt Property Investment and an associated company Dream World Investments [“the Flyt Group”] formally lodged a claim with the Western Province Rugby Football Union for damages. The claim arises from WPRFU’s repudiation and breach of the binding agreements it concluded with the Flyt Group in June 2020 for the intended development of the Newlands rugby stadium and other properties owned by WPRFU.

‘The WPRFU approached the Flyt Group seeking a R112-million loan to settle its looming debts and to conclude a development agreement in June 2020. This was just 30 days before its existing outstanding repayment obligations to Investec and Remgro for R112 million were due. The Flyt Group’s strong balance sheet and ability to fund a deal of this magnitude without bank finance – and the associated delays – meant that it could move swiftly to consider advancing the funds that WPRFU was seeking.

‘The Flyt Group and WPRFU’s legal teams and advisors worked 24/7 during June to negotiate a deal that suited both parties. It is well known that the development transaction between WPRFU and the Flyt Group that was validly concluded in July 2020 would use the WPRFU assets, including the land on which Newlands rugby stadium and Brookside rugby club are situated, more efficiently for the Union’s short-, medium- and long-term economic viability. Critically, the concluded deal would provide the WPRFU with a much-needed and sustainable financial lifeline as a 50:50 partner in all economic benefits derived from the development in the future.

‘WPRFU President Zelt Marais called the successfully concluded transaction “the deal of the century”. It therefore comes as a surprise that the WPRFU now appears to be seeking a way out of the deal that it sought and on a land value which it determined, which was also concluded after a comprehensive and transparent approval process.

‘WPRFU and the Flyt Group concluded valid agreements on 10 July 2020 after all required WPRFU forums supported the deal by an “overwhelming majority”. The WPRFU’s financial advisors presented a comprehensive analysis to the various decision-making bodies of the Union that approved the transaction. This included the Council on 30 June 2020, the Union on 8 July 2020, the Executive Committee on 8 July 2020, and the Trustees on 9 July 2020. The entire process was overseen and guided by the WPRFU’s legal team at STBB, its auditors BDO and its professional advisory team.

‘The Flyt Group has met all requirements of the agreements to date. These include the payment of the R112-million secured loan to WPRFU; the incorporation of the Newlands and Brookside DevCos; and the appointment of a board of directors for both companies.