Bank calls in loans to E.Cape golf estate
Chintsa River Developments, which is behind the multi-billion rand East Coast Resorts golf estate, is facing a civil claim of R20 million from a bank.
The East London property group could now face liquidation.
Standard Bank brought the application to the citys high court last Tuesday and the developers have until next week to respond.
The bank claims that Chintsa River Developments took out a loan from the bank for R18m in 2007 and have not made a single payment in more than a year.
The debt is increasing at an interest rate of R200 000 a month.
Standard Bank is now calling in its loan and for the company, owned by British developer Richard Dancer, and businessmen Kholekile Biyana and Dumisani Mafu,to be wound up.
Shareholders of the proposed R2.5 billion development are also concerned that the estate has been neglected and is quickly becoming dilapidated.
According to court documents, in September 2007 Standard Bank granted the developers an overdraft facility of R10m.
The banks head of business collections, Loris Cappilati, said the purpose of the facility was to provide Chintsa River Developments with working capital.
The overdraft facility was repayable on demand.
Cappilati further states that in November 2007, Chintsa River Developments again approached the bank for financial assistance when they failed to pay a construction company for building roads and installing services on the proposed golf estate.
The construction companys overdraft was increased to R15m.
Then, later that year on December 4, Standard Bank signed another agreement with the developers, who were granted yet another overdraft facility, of R3m.
This time the contract stipulated that the money must be repaid within 10 days of withdrawal.
Cappilati states: Despite demand, the (developer) has failed to make payment to the (bank) and is constantly in breach thereof.
In the event that the construction company is unable to repay its debts, Cappilati says the bank will proceed with an application for the liquidation of Chintsa River Developments.
He adds that as far as (I) am aware, no sales of erven (plots) in the proposed golf course have taken place for some time (The developers) have no other way of generating an income.
He goes on to say that the developers have not yet approached the bank with an acceptable repayment proposal.
The application adds that shareholders are also concerned that due to the lack of maintenance, the site of the golf course is starting to look unkempt and that the asset is steadily degrading and will soon not even be worth its current valuation.
Cappilati writes: I submit that it is clear from the above that it is imperative that a liquidator be appointed as a matter of urgency in order to take control of the Chintsa property and to prevent any further decrease in its value.
Dancer said: We are in the process of drawing up a response to Standard Bank.
"We are looking at additional ways to refund the company and get the development back on track. But that is not in the publics interest.
Article by: Kathryn Parkes - www.dispatch.co.za