On March 30, a High Court application was launched in the South Gauteng division of the High Court (case no 10708/2016) in terms of which Cii Holdings Pty (Ltd) - the main shareholder of Cii Hotels and Resorts who own 100 percent of the shares in Pezula Hotel and Spa Pty (Ltd) - are applying for an order in terms of which the Pezula Hotel and Spa is to be placed under supervision and business rescue proceedings in terms of the Company Act.
This application was launched after an application for liquidation was brought in the Western Cape High Court by various applicants who own suites in the resort in 2015.
On December 15, 2015, the liquidation application was postponed by Donen AJ until March 31 to afford the parties opportunity to file supplementary affidavits and furnish additional information to the Court.
The application for business rescue will suspend liquidation proceedings and afford the Court the opportunity to appoint a business rescue practitioner to explore options to turn the business around.
This morning on April 1, Hilton Worldwide issued the following press statement after being asked for comment on March 31:
"A Hilton Worldwide spokesperson can confirm: Cii Holdings (Pty) Ltd, the owners of the Pezula Resort Hotel and Spa (Pty) Ltd, have filed an application for Pezula Resort & Spa (Pty) Ltd to be placed under supervision and commence business rescue proceedings.
"Pending the determination of the application to place Pezula Resort & Spa (Pty) Ltd in business rescue, the Conrad Pezula Resort & Spa will continue with business as usual and there will be no disruption for the resort’s clients and guests. The Conrad Pezula Resort & Spa remains committed to providing the highest standard of service.
"The Conrad Pezula Resort & Spa is currently operated under the Conrad Brand, of the Hilton Worldwide Group. The Hilton Worldwide Group is not a party to the application and no other Hilton Worldwide property is affected."
From the notice of motion and annexures thereto it is apparent that the business has been operating at a substantial loss and has primarily been funded by the applicant.
According to the draft financial statements ending December 31, 2015, it would appear that the net loss sustained by Pezula Resorts & Spa was R1, 683million.
Its total liabilities exceeded its assets by R25, 033 million. Its fixed assets are valued at R53, 694 million and non-current liabilities listed as R70, 5 million.
In addition there is an accumulated loss reflected of R209 million.
Current assets are reflected as R10, 85 million and current liabilities at R17, 8 million.
Various long term liabilities exist, subordinated loans amounting to approximately R87 million held by JWMC, a loan account from applicant of R9, 3 million and there is a secured Investec loan of R25, 9 million.
The applicant alleges that the financial predicament Pezula Hotel and Spa finds itself in stems largely from the history of the entity and historical mismanagement under the previous owners together with non-viable room revenue agreements entered into with the suite holders of which there are 66 in total - 45 of whom have petitioned the High Court for an application to liquidate Pezula.
