Fight for control of Legacy Hotels drags on in high-stakes case

The battle for control of one of SA’s premier hospitality groups, Legacy Hotels and Resorts, is headed to the Supreme Court of Appeal (SCA) in a high-stakes case that pits Ensemble, an outfit backed by the Libyan sovereign wealth fund, against company founder Bart Dorrestein and associates.

Dorrestein’s company Legacy Management Holdings (LMH) owns 40.84% of Legacy Hotels and his associates Swanvest own a 19.39% stake in the group.

The two entities are engaged in a bitter tussle against Ensemble, which owns 39.79% of Legacy Hotels, with the parties looking to buy each other out.

The fight took a turn in December when the high court in Joburg ruled in Ensemble’s favour that the most effective way to settle the dispute was through a private auction in which shareholders would bid against each other for full control of the company.

The fallout between Legacy Hotels’ shareholders was first reported by Business Day a year ago.

The fight looks set to drag on after the granting last week of leave to appeal by the high court to the country’s second-highest court.

LMH and Swanvest will also appeal the decision to decline their counter-application, in which they asked the court to order Ensemble to sell to them its shares in Legacy Hotels at a price determined by an expert professional valuer.

Judge Leicester Adams said a different court might arrive at a different conclusion.

“Suffice to restate what I say in my said judgment, which is that I am of the view that the sale of the shares at a private auction between the shareholders is the fairest mechanism to achieve equitable relief,” Adams ruled, giving LMH and Swanvest a second bite at the cherry.

Legacy Hotels manages establishments such as the Michelangelo Hotel, the Michelangelo Towers, Raphael Penthouse Suites, DaVinci Hotel & Suites and The Leonardo, Africa’s tallest building.

Legacy Hotels and Resorts also manages two hotels in one of Cape Town’s biggest tourist destinations, the Victoria & Alfred Waterfront — The Commodore Hotel and its sister establishment, The Portswood Hotel.

The group also manages two properties in Kruger National Park — Elephant Point and Kruger Park Lodge — and four in the Pilanesberg Game Reserve — Bakubung Bush Lodge, Bakubung Villas, Kwa Maritane Bush Lodge and Tshukudu Bush Lodge.

LMH and Swanvest told the court that Ensemble’s links to the Libyan government were hurting Legacy Hotels and Resorts, particularly due to the international sanctions that the government has attracted over the years.

One of the reasons that LMH and Swanvest believe that a private auction would not be ideal is that Ensemble’s shares in Legacy Hotels were, and still are, assets owned or controlled, directly or indirectly, by “sanctioned entities”, and that a sale of Ensemble’s shares is prohibited by the provisions in the Financial Intelligence Centre Act.

Dorrestein has said the concept of a separation of shareholders through a private auction has no precedent in law.