Portfolio Committee on Aventura

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Portfolio Committee on Aventura
Presenter Nonkululeko Msomi Venue Cape
Town Date 18 September2002 Time 09h00
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Contents

• Brief Background on the status quo
• Operational performance
• Sustainability of Aventura for the balance of the
  financial year
• Update on the disposal of Roodeplaat
• Response to portfolio committee questions

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Brief Background on the status quo

• The nature of the business of Aventura is
  seasonal and the last four months the Resorts has
  not been performing well due winter.
• The operational income has therefore been
  impacted, hence Aventura reported losses over
  this period.
• Unforeseen delays in the disposal of the three
  resort resulted in the late payment by the
  bidders.
• In the meantime, Aventura was in arrears with
  payment of its creditors due to the seasonal
  business.
• The impact of the delays resulted in a high
  utilization of overdraft facilities with higher
  interests and therefore the proceeds from the
  three only settled the ABSA to some extent.

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Cont

• Club Prive obligations has also negatively
  impacted on the operational performance of
  Aventura.
• There has been a need to undertake necessary
  operational maintenance to keep the resorts
  running.
• This has made a dent on the potential operational
  profit.
• Future bookings are declining due to uncertain
  nature of the Aventuras future.

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Sustainability of Aventura

• The balance of the year should see the business
  improving due to the fact that it is now summer
  season.
• The pending disposal of the four resorts should
  settle creditors and therefore the interest
  payable as a cost to business will be eliminated.
• Having eliminated the loss-making resorts
  operational performance should improve within
  this disposal period.
• The cost of the management fee will be reducing
  as and when disposal of the individual resorts
  are finalized.

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Challenges due to the Restructuring of Aventura

• The valuations of the individual resorts, as
  undertaken by the independent evaluator, are
  different or higher than the banks evaluation/s.
• Consequently, the preferred bidders find it
  difficult to raise funding at market value for
  these resorts.
• This is resulting in serious delays to some of
  these transactions i.e. Aventura Roodeplaat.
• The current financial situation of Aventura has
  put a lot of strain on the disposal process.
• The negative publicity on the Aventura
  financials.

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Response to the Portfolio Committee Questions

• The portfolio Committee raised the following
  issues
• Security
• The security of the Resorts are currently
  undertaken by Recom Security.
• The Managing Director, Don Hamilton, use to be
  involved in the Boulevard Hotel Group, which is a
  franchise group.
• Hamilton was never employed by Protea.
• Mercedes
• An exclusivity agreement was reached between
  Aventura and Dairy Maid. Dairy Maid paid R 310
  000 for the exclusive right to sell their
  products at the Resorts.
• An ML Mercedes was purchased by Aventura to
  market the products of Dairy Maid on the Resorts.

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Cont.

• The purchase was not sanctioned by the Board.
• The responsible Manager was disciplined at a
  disciplinary hearing and given a final warning.
• The ML Mercedes was sold to the Mercedes
  Dealership in Cape Town . The shortfall was paid
  out of pocket by the responsible Manager.
• Computers
• Aventura computer network functioned on a CLS
  system.
• After Protea was appointed, a new system,
  Landmark program was installed.
• The Landmark Program was installed to be
  compatible with the existing Protea Program,
  specifically for central reservation.
• Part of the expenditure was to prepare the
  computer network for Y2K.

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Conclusion

• Department of Public Enterprises is closely
  monitoring the performance of Aventura and manage
  the relations with all stakeholders
• Cabinet has also requested a report on the Club
  Prive obligations,the Department is finalizing
  the report and will advise accordingly