REVEALED: The real 'cost' of WPRFU administration

Yesterday at 03:54 PM

SPOTLIGHT: The cost of the administration, which the Western Province Rugby Football Union has been under for more than three years, and the delay in the sale of Newlands have been far more costly than generally believed.

The Executive Council of the South African Rugby Union, this past Friday, advised the administrator of WPRFU, Peter Jooste, to 'wind up' the union's period of administration.

"The decision clears the way for the union to hold elections and will restore its full voting rights once the process is complete," SARU said in a statement, adding: "That process is expected to be completed by June 2025."

However, the sale of Newlands - according to SARU's statement - is now WPRFU's sole responsibility.

WPRFU was placed in administration in October 2021, when the union was in such a dire financial position and governance in such disarray that it was effectively 'bankrupt'.

Rian Oberholzer, now SARU CEO, was the initial administrator. He was replaced by Max Fuzani on a 'six-month' contract, with Peter Jooste becoming the third administrator in January 2024.

With the administration lifted, the cost of the protracted process has emerged.

It follows in the wake of last Tuesday's development, when Dream World revealed they have decided to call up the bonds they hold on all the WPRFU properties – including Newlands, Millhouse, Brookside and Oranjezicht.

The legal process to have the properties sold on auction has been activated.

The 'partnership' with the Flyt Property Group allowed WPRFU to unlock a loan of ZAR113-million from Dream World Investments 401 (Pty) Ltd in 2020.

That loan was used to pay off previous debts owed to Remgro (ZAR58-million) and Investec (ZAR50-million).

The loan, and costs, have accrued interest for the past three years.

The amount of ZAR250-million has been widely touted as the outstanding debt.

However, @rugby365comcan now reveal that it is, in fact, much higher.

According to the minutes of a Special General Meeting held on June 10 last year, Jooste reported the loan from Dream World had accrued interest at ZAR1.2-million per month - with a further ZAR33-million owed for development fees.

He also informed the meeting that Dream World is pursuing a 'damages claim'.

The alarming amount of the accrued debt as a result of all the delays was also confirmed during a Council Meeting a month later, July 8.

The Administrator reported that he received a summary from Dream World indicating that WPRFU would have owed ZAR274-million by the end of the year if no settlement was reached.

Jooste, according to minutes of the meeting, informed council that selling Newlands was the only option to settle the debt.

The Administrator also indicated that he received various offers which did not meet the requirements.

Andrea Keller from BDP attorneys presented the two offers to the meeting.

The first offer was 'accepted' by 94 percent of the delegates, but the deal has not been finalised and it is now reported that the potential buyer has asked for a two-year extension.

It means, before the damages claim, the accrued debt is currently more than ZAR300-million and the asking price of ZAR250-million for Newlands will not cover the debt.

Given these revelations, it is understandable why Dream World has opted to call up the bonds.

It is also not surprising that - since last week's announcement that the administration will be lifted - clubs have been asking some interesting questions:
* When will the clubs receive the reports from each of the three administrators?
* When will the annual financial statements for the years ending 31 December 2021, 2022, 2023 and 2024 be presented to the clubs for adoption and approval before any Elective AGM can be held?

@king365ed
@rugby365com

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