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Monday Jul 05, 2010

Top KZN golf estate faces ruin

An upmarket golfing and housing estate in KwaZulu-Natal is facing financial ruin with some investors fearing they could lose everything.

The 220ha Cotswold Downs estate in Hillcrest, the brainchild of property kingpin Keith Wakefield, is under threat, with an attempt by First Rand Bank to liquidate the estate.

This is being opposed by Wakefield and his partners. They have suggested in papers before the Durban High Court that the company be placed under judicial management, to enable it to trade its way out of trouble as the property market improves.

But scores of people who ploughed money into the multimillion-rand development - and who say they believed they were buying actual sites, when their money was used to develop the estate instead - are now jittery.

Some have told The Mercury that they have asked for their money back but, in spite of promises, they have not received a cent.

First Rand Bank lent Cotswold Downs R35 million in 2006, when the initial development projection of R65m escalated to R107m. Wakefield and his partners stood personal surety for various amounts and properties were also used as security.

However, the loan was never repaid and, in spite of negotiations and new deals, the bank says "they reneged on every promise".

At present, it is owed R40.7m plus interest. Wakefield's partner, Nicolaas van Rooyen, admitted the debt in an opposing affidavit, but said a winding-up and "forced sale on auction" of the 200 unsold sites would not be in the interests of creditors, because the proceeds would not be sufficient to settle the debts and it would be "financial suicide".

He added that about 35 people would lose their jobs.

"The directors have not sat back and have made efforts to resolve the situation," he said.

Van Rooyen said the company could meet its daily expenses and the property market was expected to improve. The company would be able to honour its debts when all the sites were sold, and negotiations were under way with another financial institution to possibly purchase the remaining sites.

One investor, Dean Hayman, said he was confident Wakefields would honour its commitments. "I'm not sure what I signed, but with a company like Wakefields you're safe. I'm sure they wouldn't just take our money."

But another investor who asked not to be named believed she has lost everything. "When I signed the documents, I noticed they were an 'Option to Purchase' and not a Sale Agreement. When I questioned it, I was told by the agent the land was not proclaimed for residential development, but I shouldn't worry, as the process would be completed within six months and I would be able to sign a sale agreement.

"I had to pay the full purchase price of R740 000 within two weeks of signing. By the time the land was proclaimed, one-and-a-half years later, the house prices had gone down and interest rates had gone up. By chance I also stumbled on the fact that the land was not in my name."

She said Keith Wakefield had offered to pay her R900 000 (purchase price plus interest) but she had not received any money.

"Then Haydn Wakefield suggested I take the land because they didn't have the money to pay me. But now a lawyer has said if the estate is liquidated, 'my' land could be attached and re-sold."

Another investor, Wayne Till, said he was promised his money back six months ago but never received it.

"I was under the impression that the money I had paid over was in trust and the land belonged to me. No-one ever told me that it was going to be used to develop the estate."

Wakefield's attorney, Bruce Forrest, said the investors were sophisticated buyers and he would have thought they would have read what they were signing.

Wakefield agreed the matter was serious. He said negotiations were under way to resolve the issue and he would make a statement later.

The Mercury

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