Autumn Star Trading 286 (Pty) Ltd

(Under Provisional Judicial Management)

Masters Ref: T7645/09

better known as:

*Castle Walk*

Holding Company:

Gemini Moon Trading 122 (Pty) Ltd

 

Documents on File:

 

1. Notice of Motion

2. Court Order

3. Provisional Certificate of Appointment

 

CASTLE WALK
AUTUMN STAR TRADING 286
INCOME STATEMENT as from 01/11/2009 to 28/02/2010
INCOME			EXPENSES
Vacancy factor 0%
Monthly rental income November 2009	-		Operational Expenses November 2009	-
			Once off Expenses November 2009	-
				-
Monthly rental income December 2009	-		Operational Expenses December 2009	33,169.23
			Once off Expenses December 2009	-
				33,169.23
Monthly rental income January 2010	-		Operational Expenses January 2010	61,329.92
			Once off Expenses January 2010	-
				61,329.92
Monthly rental income February 2010	-		Operational Expenses February 2010	25,138.84
			Once off Expenses February 2010	122,060.80
			Once off Expenses - LDP Auditors (still to be paid)	798.00
				147,997.64
	-			242,496.79

 

1.                  You will note that the expenses exceed the income. This was financed by loans where the provisional judicial managers received extension of powers dated 27 November 2009 and as set out above on page 4 of this report.

2.                  Bluezone Property Investments (Pty) Ltd (in liquidation) has a claim for Rent Roll and Administration

            of R 195 132 against the company.

3.                  The company has a claim for R 874 254 against the insolvent Bluezone estate.

4.                  The current account is held with FNB under acc number 6207101363 and is showing a debit balance

            of - R 79 457.42 balance. The Nedbank account is held under account number 901-591-8064 and

            has a credit balance of R 0 as on the 1^st of March 2010.

5.                  The property’s vacancy factor is 0% as on end February 2010 but no monthly rental is received. Bluezone Property Investments (Pty) Ltd (in liquidation) is in arrears with their rent and SKT, the ground floor tenant is not paying any rent at all. They have entered into a legal dispute with the company

            regarding a non-existing rental agreement and an ambiguous offer to purchase, made directly to HCL Trust. A Section 417 Enquiry has been set within the next two weeks to determine the validity of their so called offer to purchase; prior the judicial management order as well their arrear rental status.

6.                  The company’s arrear tax liability at 30 November 2009 is estimated at R 118 278.

7.                  Total Immediate Obligations of the company : R 463 524.14

8.                  The bond account is held with Imperial Bank account number 5024563 with an outstanding balance

            of R 1 869 053.18 as on the 20^th of January 2010. The bond payment  is R 43 798.74.

9.                  No provisional judicial management fees have been charged or collected from the company, neither has the Master of the High Court granted any fees to be collect by the judicial managers as on date of this report

 Forensic Auditors’ Report Findings 

The company was incorporated on 19 August 2004 under reference number 2004/023632/07. The company’s registered office appears to be that of its auditor, Loubser Du Plessis Incorporated, and is given

as De Waterkant Building, 10 Helderberg Street, Stellenbosch. Hennie Lamprecht is given as the sole director.

 

The company sole asset of significance is Block C Castle Walk Corporate Park which it acquired in July 2005 at a cost of R 4 600 000. The property was valued by J.T. Seyffert in July 2006 for R 8 100 000 and formed the basis of a syndication arrangement by Bluezone at a value of R 8 479 000.

 

Other than for R 976 460 expended on renovations, the remaining R 2 900 000 represented Bluezone’s

profit on the syndication gross of commissions paid to brokers for soliciting investors for the scheme, legal costs and incidentals. Despite the agreement specifying that the sale commission was to be paid by the seller,

it appears that R 200 000 was paid to Hennie Lamprecht and Paul de Waal as commission. This does not appear to have been disclosed to investors.

 

THE PROPERTY SYNDICATION

 

The investment was geared to the extent of a mortgage bond by Imperial for R 3 000 000. The balance of

the funding requirement of R 5 479 000 was provided by a loan from the company’s holding company and ultimately by investors.

 

The purchase agreement with FBS Holdings included “all furniture as viewed on site and all airconditioning units installed on the property”. The furniture was not specified nor is this furniture specified on the asset register of Bluezone Property Investments (“BZPI”). In addition, the company obtained a draw of R 625 000 from Honey & Partners for “Furniture” on 23 March 2005 which seems to form part of the cost of improvements to the property. From the above, the forensic auditors have concluded that the Furniture currently used by BZPI  could be owned by the company, despite this furniture being reflected on the asset register of BZPI.

The furniture was sold by BZPI to SKT (the ground floor tenant) for R 200 000 and the proceeds banked

to the BZPI bank account on 14 October 2009.

 

The property was let to Bluezone Property Investments (in liquidation) on an initial yield of 9.2% escalating

at 9% p.a. Bluezone appears to have paid the levies over the property although not liable in terms of the

lease agreement. Unlike the other syndications, no maintenance fund or vacancy fund was created, nor provided for in calculating the projected returns to investors.

 

THE ADMINISTRATION OF THE COMPANY POST SYNDICATION

 

BZPI appears to have paid the rental in full until December 2008, where after the receipts became erratic. This continued throughout the period resulting in BZPI owing approximately R 1 392 893.65 in arrear rent

as at 31 December 2009.

 

What has counted in the company’s favour was that (when BZPI was paying rental) the payments on the mortgage loan were in excess of the minimum requirement. As the syndication was part of the

“capital growth” portfolio, Bluezone was required to apply any surplus funds against the mortgage loan with the result that, despite the non-payment of rental, the company remains R 401 974.56 in advance on the Imperial loan as at 30 November 2009. This has avoided any default on the mortgage loan.

 

The company has rendered a VAT return to August 2009. The company has rendered an income tax return up to the 2008 tax year. There is an amount outstanding on the income tax account of R 104 198.

 

FINANCIAL POSITION

·        The Castle Walk property has been valued by Messrs of Valuers & Appraisers at R 8 800 000.

This resulted in a write down in the carrying value of the property of R 460 032 after-tax;

·        Property and administration expenses of R 195 132 have been accrued; and

·        interest of R 14 080 has been provided on the tax arrears

 

Despite the loss for the period to 30 November 2009 of R 651 762, the company remains solvent, but is

not able to meet its immediate obligations of R 240 338.80, nor redeem its overdraft of R 79 457.42.

 

 

CONCLUSION

 

Should the provisional joint judicial managers be satisfied that there is no danger of a contribution towards

the Bluezone estate, the company has a claim of R 874 254 against the Bluezone insolvent estate.

 

 

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