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There has been strong interest from buyers as debt-ridden Rebosis Property Fund, which entered business rescue in August, started with the registration of the public sale process of its assets on April 6.
This follows the publication of the business rescue plan on March 17, which will enable the implementation of a turnaround plan to preserve the company in the long term. The process is expected to close on April 28.
Rebosis CEO Otis Tshabalala said there had been “significant interest” from buyers for the assets, especially the dominant shopping centres in the Eastern Cape, including Baywest Mall in Gqeberha and Hemingways Mall in East London.
“To date, we have received interest from various listed and non-listed funds for some of the assets on the retail side,” Tshabalala said.
Rebosis went into business rescue on August 26 and the trading of its shares on the JSE was suspended. Independent creditors representing 100% voting interest and R8.7bn in value favour the amended business rescue plan.
The company cited rising interest rates, the inability to recover increased municipal costs from sovereign tenants, continuous delay of rental payments by some government departments — accounting for more than half of group revenue — and the government’s downward pressure on significant reversions upon renewal of leases as reasons for applying for the protection.
Rebosis listed on the JSE in 2011 with seven properties valued at R3.3bn. At the end of February 2022, the real estate investment trust (Reit) had 41 office and retail properties valued at R13bn, with bank debt of R9.5bn. Its five shopping centres — Baywest Mall and Hemingways in the Eastern Cape, and Forest Hill, Sunnypark and Bloed Street in Gauteng — are valued at R5.9bn.
Given its loan-to-value ratio of 72% — a vital measure of the business rescue practitioners (BRPs) are required to raise a significant amount of equity to reduce current overall debt to a sustainable level.
As part of the business rescue plan, BRPs Jacques du Toit of DTB Business Rescue and Phahlani Mkhombo of Genesis Corporate Solutions have proposed the company sell its properties pursuant to the public sales process and/or for secured creditors to take over their secured properties (in reduction of the secured debt owed to creditors). This would enable the business rescue practitioners to reduce company debt, and depending on the outcome of the property portfolio restructure, to consider the viability of implementing a balance sheet restructure.
Should the company continue operating in terms of the business rescue plan, and the proposed restructuring plan is successfully implemented, the company’s business, affairs and debt will be restructured in a manner that will allow it to continue operating its business on a solvent basis.
How it works
Du Toit and Mkhombo said interested buyers were encouraged to register their interest by emailing psp@rebosis.co.za or to contact the company for additional information.
- Once the registration email is received, would-be buyers will be required to complete a non-disclosure agreement and pay a non-refundable participation fee of R5,000 excluding VAT.
- Prospective participants will be provided with access to a virtual data room containing a process letter and other information necessary to inform an expression of interest letter that is to be submitted on or before May 9.
- The business rescue practitioners and secured creditors will consider and evaluate all expressions of interest received and select preferred bidders who will be invited to progress.
- Preferred bidders will subsequently be granted access to additional information via the virtual data room for purposes of their respective due-diligence investigations of the sale properties.
- Bidders wishing to proceed to make a binding offer will be required to submit irrevocable binding offers on or before June 29 with proof of funding for the full purchase price.
- Preferred bidders may propose revisions to their binding offers after feedback from the business rescue practitioners and submit a replacement final offer before July 20.
- Evaluation of the final offers will be undertaken by the business rescue practitioners in consultation with the secured creditors and will be accepted by no later than two weeks after the final offer date.
The practitioners said participants might also be given the opportunity to attend optional site visits of the sale properties that were not accessible to the public.
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