FRIDAY, NOVEMBER 30, 2001
DON SHAREHOLDERS GIVE GREEN LIGHT TO TRANSFER OF HOTEL PROPERTY PORTFOLIO TO
ELLWAIN (PTY) LTD FOR CONSIDERATION OF R105-MILLION
THE Don Group emerged from a general meeting of shareholders yesterday
(November 29, 2001) as a suite hotel under real controlling black ownership
that is operationally effective and finally free from crippling bank loans
and heavy debt servicing costs that had hobbled its performance in recent
years.
This is the outcome of formal shareholder approval of a deal in which the
listed suite hotel chain transferred ownership of its property portfolio to
Ellwain (Pty) Ltd for a consideration of R105-million. This deal follows an
earlier transaction in which Ellwain (Pty) Limited concluded a cash deal
with Don's bankers to take over the hotel chain's debt completely.
Thabiso Tlelai, chairman and chief executive officer, Don's majority
shareholder, said the approval of the general meeting meant an unencumbered
hotel group could consolidate the gains its had made in the financial year
to June 30, 2001 in which it had boosted operating profit by 54 percent.
Tlelai said: "With a fine brand name, excellent locations, money in the
bank, rising occupancies and a reasonably stable economy which encourages
business travel, as well as stringent control of costs, we're confident Don
will present a positive picture at the close of the current financial year
in June 2002."
Tlelai said that as Don's main clientele were South African business
travellers the nine-strong Don Hotel chain had not experienced any downturn
resulting from the September 11 tragedies in the United States.
"In fact, we are seeing steadily improving occupancies which is helping
bottom line performance on the back of increased room rates.
Of the properties now held by Ellwain, Don has ceased hotel operations in
six and has strengthened the core suite hotel business by opening
restaurants and pubs in the nine properties located in Cape Town,
Johannesburg, Sandton, Pretoria and near Johannesburg International Airport.
Don is committed to Ellwain for a monthly rental of R512 000 for these
hotels and has an option to extend or cancel the rental or to buy any
property at any time in the next three years at a price agreed in 2001.
Details of the Ellwain property transaction were circulated on November 7 to
shareholders in terms of JSE Securities Exchange South Africa and the
Securities Regulation Panel requirements.
Ellwain (Pty) Limited is a consortium represented by financiers Eric and
Sidney Ellerine and property consultant Marc Wainer. Sidney Ellerine and
Marc Wainer are also Don directors and as 'related parties' to the arm's
length property transaction, had no say in the general meeting vote.
The Don annual general meeting, which preceded the general meeting, re-
elected retiring directors Errol Grolman and Marc Wainer to the board of
directors (both being eligible for re-election).
The board now is Tlelai, Errol Grolman, Marc Wainer and Sidney Ellerine.
Tlelai intends announcing further board appointments to make the directorate
more broad based.
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