Huge housing project stalls before it begins
Investors ask for business rescue option
GRAHAMSTOWN’S most ambitious multimillion rand private residential development has stalled without a brick being laid.
Disillusioned international and local investors have now asked the high court to place the developer company into business rescue.
The massive development, proposed by company Belmont Development, was to be built on the old Grahamstown golf course and was to consist of 627 houses, three apartment blocks, and a shopping complex with 750 parking places.
Belmont Development’s director David Davies proposed building an alternative golf course and clubhouse for the Grahamstown Golf Club in Belmont Valley, some 10km out of town, on condition they swap it for their current golf course on 222ha just outside town. On top of this they would get an R8-million starter purse.
But while the development of the stunning new golf course and subsequent land swap appears to have gone smoothly, the housing development looks set to stall.
Investor in the scheme and a shareholder in Belmont Development, James Williamson, alleges in court papers that Davies was conducting the affairs of the company in a way that unfairly disregarded the interests of the other shareholders and was in breach of an agreement with them.
Williamson and Norwegian investor companies, Dolphin Management, Robert Iversen Holdings, Jemi Holdings, Arne Frostad Holdings, Geni Holdings and Stale Invest hold a 50% shareholding in Belmont Development.
Business rescue proceedings allow for the temporary appointment of a rescue practitioner to assist in the rehabilitation of a flailing business.
It also provides a temporary moratorium on creditors who may wish to sue or liquidate the company.
Williamson says they have no choice as investors, who have pumped over R70-million into the project to date, face losing everything.
He accuses Davies of failing to heed an agreement in terms of which he was supposed to register a mortgage bond in their favour over property to secure the millions in loans made to the company.
Williamson also claims Davies grossly misled them with regard to the potential value of the project to persuade them to make substantial investments and loans to Belmont Development.
He said the project could not remotely approach the R317-million value Davies had ascribed to it.