Rebosis Property Fund founded by Sisa Ngebulana is going into business rescue, and its shares have been suspended on the JSE with immediate effect.
The property company has been working on a turnaround plan to restructure and strengthen its balance sheet. This included plans to sell 32 of its buildings, including those wholly owned by its subsidiary Ascension Properties Limited. Rebosis announced that plan in October 2021.
On Friday, the owner of Baywest Mall and East London’s Hemingways Mall said it planned to initially put 25 assets on the market for disposal that it considered non-core or felt they required capital injections to turn around.
But after extensive modelling and testing of all viable options, Rebosis’ management and board believe that the group is now “financially distressed”.
It will still take time to get shareholders’ approval to dispose of the identified assets. At the same time, the rising interest rates are pushing up Rebosis’ debt servicing costs. It’s also grappling with high rates and taxes levied by some municipalities that Rebosis cannot recover from “sovereign tenants”. Furthermore, the company faces continuous delays in rental payments by certain national and provincial government departments, as well as municipalities. These make up more than 50% of Rebosis’ revenue.
“Considering the South African Reserve Bank’s indication of further interest rate hikes in the foreseeable future, and given Rebosis’ limited foreseeable cash flow, the management and board is of the opinion that the best option to ensure the long-term survival of the group is to commence business rescue,” wrote Rebosis in a statement.
The company hopes that under the direction of an experienced business rescue practitioner, it can return to sustainability and that the business rescue process could incorporate some of its management’s existing turn-around strategy.
Rebosis added that its board is in the process of appointing a reputable Business Rescue Practioner and has since applied for the suspension of trading in its ordinary shares and A-ordinary shares on the JSE with immediate effect. The JSE has granted approval for the suspension.
Source: News 24