Rebosis cuts its losses and sells UK business for just R700

Rebosis Property Fund, which has been offloading assets to cut debt and win back investor support, says it will sell its 49.4% stake in UK mall owner New Frontier Properties for just R700.

“The board of directors of Rebosis is of the opinion that the shareholding in New Frontier has been one of the reasons for a depressed Rebosis share price, due to the challenges New Frontier is facing, being declining shopping mall valuations in the UK as a result of, among other matters, Brexit,” it said on Friday.

The landlord’s shares have slumped to just 74c on Friday from highs of more than R13 in February 2017. In a separate statement on Friday, New Frontier said it would probably be forced into administration if it lost the support of its lenders.

Rebosis said it would sell its New Frontier stake, held via seven of its subsidiaries, for a total consideration of R700, or R100 per subsidiary. The buyers are Edwin Henry Dednam and Orion Hotels & Resorts (Africa).

Rebosis’s carrying value of its investment in New Frontier consists of a direct investment value of R109m, a loan to New Frontier of R180m, and a vendor loan of R65m.

The company said it will fully impair these amounts in its results for the year ending August 31 2019. It will also cancel the remaining cross currency swap.

In 2015, Rebosis bought 62% of New Frontier for R1.2bn. Rebosis was listed by CEO Sisa Ngebulana eight years ago.

New Frontier said separately on Friday it made a loss for the nine months to end-May of £60.1m (R1.1bn), from a £4.3m profit previously.

The loss was mainly due to a fair value loss on the group’s property investments of £63m. The company had net liabilities of £36.8m.

“The board of directors of New Frontier has noted the net liabilities shown on the balance sheet and it believes that so long as the group’s lenders continue to release funds to the group to meet its commitments, the business continues to be a going concern and these financial statements have been prepared on that basis,” it said.

“The lenders are continuing to provide support to the group; however, the board recognises that should this support cease, it is likely that the company would enter administration thereafter.”

hedleyn@businesslive.co.za