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Pinnacle forecasts bigger loss, pins hopes on Lagos
December 8, 2009
By Florence de Vries
Embattled luxury beach and golf resort group Pinnacle Point, which has launched an extensive recapitalisation programme to meet working capital requirements, expects its developments in Lagos to be its biggest contributor to profit in the year ahead.
Pinnacle Point said yesterday that it expected its results for the six months to August to be between 30 percent and 40 percent lower than the headline loss a share for the interim period a year earlier.
However, it noted the figures for last year represented the former Acc-Ross Group, with which Pinnacle Point merged a year ago, and were therefore not comparable because of the reverse listing on Pinnacle.
Pinnacle Point's focus is on developing golf, resort and leisure estates. Its assets include golf courses designed by Ernie Els and Retief Goosen.
Last month, the shareholders agreed to a rights offer of R360 million to recapitalise the business. Major shareholders Absa and Goldbanc Management Associates will convert their loans into equity.
Earlier this year, newly appointed chief executive Hennie Pretorius said the group faced challenging conditions. The global financial crisis would adversely affect performance, particularly in the first half of the 2010 financial year.
"The group intends to focus on its two international developments in Lagos and the Seychelles, which offer unique opportunities," Pretorius said.
"The Lagos Keys development will commence shortly and is expected to be the largest contributor to the group's performance for the year ahead," he said.
In the South African market the group intends to focus on completing certain of its existing projects and ensuring that these will be well positioned to take advantage of any improvement in market conditions.
In August, Pinnacle Point concluded an agreement with Absa, which had agreed to inject R150m into Pinnacle Point on the condition that it had to raise R100m in fresh capital elsewhere. Absa owns 28 percent of Pinnacle Point.
Pretorius explained that Pinnacle Point intended to raise the money on the Nigerian market as it is listed in South Africa as well as on the Nigerian stock exchange.
In September Pinnacle Point said it had resolved to raise a minimum of R360m through a rights offer and potentially through an issue of shares for cash. The proceeds of the equity capital raising would be used to reduce the level of borrowings by about R165m and raise new cash of at least R195m.
Its board was of the view that Pinnacle Point required additional capital of R250m, to be raised through a rights offer.
Pinnacle Point's shares were unchanged at 10c yesterday. - Additional reporting by Thabiso Mochiko
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