Not wanting to kak on any victory parade but thought you guys might want to read chunks of the comission findings below and attached is just one of many pieces you might find interesting...
ON RESUMPTION ON 18 OCTOBER 2012 (at 10:08)
CHAIRPERSON: Morning Mr Thurling.
VIDRIK LIONEL THURLING (still under oath)
EXAMINATION BY MR COCKRELL (continued)
MR COCKRELL: Thank you Chair, morning Mr Thurling just a few more questions. Mr Cockrell I’m going to ask that the file of factual witness statements be placed before you it’s trial Bundle B and I’d like you to be taken to trial Bundle B3 page 17. Mr Thurling paragraph 16 on that page is it blanked out in your version?
MR THURLING: No.
MR COCKRELL: Thank you, just to orientate you this is the factual witness statement of Mr van Dyk the accountant at Purple Capital and what he says in his first sentence of that paragraph is:
“The current financial position of Gold Circle Western Cape as a stand alone business does not (in his view) threaten it with closure”.
Now Mr Thurling we went through the numbers yesterday at the commencement of your evidence regarding the losses incurred by Gold Circle Western Cape. What I wish to invite you to do is to respond to what Mr van Dyk says in the first sentence of that paragraph that the financial position of Gold Circle Western Cape as a stand alone business does not threaten it with closure.
MR THURLING: In my opinion it most definitely is threatened with closure if one simply looks at the losses incurred by the Western Cape region of Gold Circle over the past five years.
MR COCKRELL: Now to be fair to Mr van Dyk what he said is it’s correct that Gold Circle Western Cape has been losing money for a number of years but he says it’s rich in assets and some of the immovable property assets could be sold. I’d like to go through each of those immovable properties one by one and invite you to tell the Tribunal what would be involved in studying those assets whether they could be sold at all and if so what amounts are likely to be realised. Let me start with what is the jewel in the crown Kenilworth Racecourse is that an asset that could be sold in order to raise cash for investments?
MR THURLING: Under no circumstances whatsoever.
MR COCKRELL: Why not Mr Thurling?
MR THURLING: It’s the race, it’s the primary racecourse in the Western Cape and should Kenilworth be sold racing in the Western Cape will cease immediately. As it stands at this point in time one of the great negativities that Western Province Racing suffers is the fact that it presently has two racecourses, one it’s primary racecourse being Kenilworth and a second racecourse being Durbanville but Durbanville due to the tightness of the track and the fact that the racecourse has never been upgraded has got a massive stigma attached to it with respect to betting and with respect to reliability from a punter’s perspective whereby punters have no confidence to spend their money and bet on racing at Durbanville. That puts us in a position where Kenilworth is effectively untouchable and should ultimately become our only racecourse in the Western Cape.
MR COCKRELL: Alright let’s move on to the second of the assets then
the one you’ve just referred to in the answer you’ve given that’s the Durbanville Racecourse. Mr Thurling just to orientate you, you do refer to the Durbanville Racecourse in your witness statement paragraph 18.2 and you may wish to go there just to get your bearings. What you do in that paragraph 18.2 is to describe the encumbrances that currently apply to Durbanville Racecourse can you summarise those for the Tribunal?
MR THURLING: Just for the purposes of clear explanation Durbanville Racecourse consists of property that is around 45-odd hectares of which just under four hectares is owned outright by Gold Circle at this point in time, the rest of it is subject to a reversionary clause whereby should racing not take place within a 24 month period at Durbanville Racecourse it reverts back to the Durbanville Municipality for the original purchase price of R30.
MR COCKRELL: Now have any steps been taken by Gold Circle Western Cape to engage with the Durbanville Municipality in order to have that clause restriction removed?
MR THURLING: In recent times we have spoken with the Durbanville Municipality but just to put it into perspective if one goes back to, and I stand to correction here, approximately 2005/2006 one of our directors then a Mr Hassan Adams engaged with the Durbanville Municipality at the time whereby there was a discussion to have the reversionary clause lifted. At the time the Municipality was prepared to enter into a joint venture which would have derived approximately R20 million of revenue back to Gold Circle.
MR COCKRELL: As we sit here today what is the status of those
negotiations between Gold Circle Western Cape and Durbanville Municipality regarding…(intervention)
MR THURLING: In absolute infancy.
MR COCKRELL: Then Mr Thurling if we can go on to the next of the immovable properties it’s the Milnerton Racecourse, in your witness statement paragraph 18.3 you explain some of the zoning difficulties that currently make it difficult to sell Milnerton Racecourse can you describe what those difficulties are to the Tribunal please?
MR THURLING: Okay again just to put it into some perspective the Durbanville, the Milnerton Training Facility it’s referred to often as a racecourse but in effect it’s a training facility which is the last portion of the original Milnerton Racecourse which is presently used to house approximately 800 racehorses that are trained there in the Western Cape. It is surrounded by a development called Royal Ascot and the property has a right of first refusal to the company Stocks & Stocks so should that property ever go on the market Stocks & Stocks effectively have a right of first refusal over the property. The property is presently in the process of being rezoned into various portions, one for residential and some for commercial but due to objections by the residents and the tedious process in terms of getting the rezoning through we estimate that it will take as long as four years from now prior to the rezoning being complete.
MR COCKRELL: Now if when the rezoning is finally resolved in a number of years time if the Milnerton Training Centre were to be sold what would happen with the horses who are currently stabled at
Milnerton?
MR THURLING: All 800 horses would need to be relocated to a new training facility but perhaps most importantly we would also need to put the necessary tracks, the training tracks in for those horses as well as the grooms’ facilities and other adjacent facilities at the current Milnerton Training Facility.
MR COCKRELL: Now where would they be relocated to?
MR THURLING: At this point in time the Board has not defined and clearly agreed on where that would be but it’s the Board’s vision that most likely it would be Philippi.
MR COCKRELL: Now can you give some sense to the Tribunal of what the Philippi centre currently looks like and what would be involved in upgrading it in order to make it suitable for the stabling of an additional 800 horses?
MR THURLING: The Philippi Training Centre which consists of land of approximately 50-odd hectares presently houses approximately 300 racehorses and has adequate training tracks for those 300 racehorses. Part of our problem is that it’s been considered to be undesirable for the majority of our Western Cape trainers and stakeholders due to massive security issues in the area. The area is adjacent to one of the largest squatter camps in South Africa, it also has a secondary problem whereby there’s a massive amount of wetland at Philippi itself which would require substantial landfill. The upside for the long term is the fact that it is only six kilometres from our primary racecourse being Kenilworth so from a future perspective it makes logical sense for us from a
transport perspective to expand the Philippi Training Centre and accommodate approximately 1200 Western Cape racehorses on that training centre. That, however, would require the building of I estimate at least 1000 new stables, massive perimeter security, the tracks there are only at this point in time capable of handling the 300 horses that are based there so a complete upgrade of all the tracks, a new grass track, a new cinder track and at least two new sand tracks would need to be installed. As I’ve said perhaps one of the largest expenses would be expansive perimeter security.
MR COCKRELL: Thank you Mr Thurling and then just for the sake of completeness there are two additional items on the property shopping list in your witness statement paragraph 18.4 and paragraph 18.5 it’s Modderrivier and Helderberg, your evidence is here I don’t think I need to ask you to elaborate on those two properties. Mr Thurling I’m going to ask you finally to deal with a few issues relating to the various entities that are involved in the transactions that are before the Tribunal. We covered some of this material yesterday but it occurred to me overnight that perhaps it wasn’t done as clearly as it might have been so let me try and cover some of that material again and ask you if you can assist the Tribunal with these questions. As we sit here today who owns the issued share capital in Kenilworth Racing (Pty) Ltd?
MR THURLING: The Western Province Racing Club.
MR COCKRELL: Is that the same as the entity referred to in the documents as the Western Province Regional Racing…(intervention)
MR THURLING: Yes that’s correct, that’s correct, Western Province
Regional Racing Association.
MR COCKRELL: Why I ask you that question Mr Thurling to an outsider like me there are lots of entities which have very, very similar names can you tell the Tribunal what is the Western Province Regional Racing Association, what does it do?
MR THURLING: At this point in time as I explained yesterday Gold Circle consists of two regional racing associations that look after effectively racing in each jurisdiction. So you have the Western Province Regional Racing Association of Gold Circle looking after matters purely racing in the Western Cape region and you have the KwaZulu-Natal Regional Racing Association in that jurisdiction.
MR COCKRELL: There’s another entity mentioned in the papers with a very similar name it’s the Western Province Racing Club can you tell the Tribunal what that is and how it’s difference from the Western Province Regional Association?
MR THURLING: In order to facilitate the various aspects of the proposed merger and de-merger we established the Western Province Racing Club primarily to deal with the fact that going into the future the Western Province region under the Gold Circle constitution has a number of (a) life members and (b) members who are not racehorse owners. In terms of joining the Racing Association, the Racing Association only allows for membership by members who are racehorse owners so in order to facilitate the ongoing relationship with members who have supported racing in the Western Cape but perhaps are no longer racehorse owners or are life members we established the Western Province Racing Club.
MR COCKRELL: Now can we go back to the entity which owns all of the shares in Kenilworth Racing as we sit here today that’s the Western Province Regional Racing Association. Let me ask you this do you have a position on the Western Province Regional Racing Association?
MR THURLING: I do I’m presently the chairman.
MR COCKRELL: If I ask you to go please to trial Bundle A2 page 31, Mr Thurling just to orientate you this is the de-merger agreement and all I would direct your attention to is on page 31we see that the agreement was signed for the purchaser, that’s Kenilworth Racing, it was signed by Vidrik Lionel Thurling (you) and you describe yourself as the Chairman of the Western Cape (Western Province) Regional Racing Association Chairman is that correct?
MR THURLING: That’s correct.
MR COCKRELL: If I ask you Mr Thurling who appointed you and Mr Bloomberg as the current two directors of Kenilworth Racing (Pty) Ltd what would the answer be?
MR THURLING: The Board of the Western Province Regional Racing Association.
MR COCKRELL: Now that’s the position at the moment I want to ask you to look ahead and to imagine what would happen if the merger were to be approved. We know then and it’s common cause in these proceedings if the merger were to be approved the trust would acquire all of the share capital in Kenilworth Racing and I want to ask you in that future world who would appoint the directors of Kenilworth Racing
(Pty) Ltd?
MR THURLING: The Western Province Regional Racing Association will appoint three directors to Kenilworth Racing (Pty) Ltd the remaining directors will be appointed by the trust and the Racing Association.
MR COCKRELL: In elaboration of that can I ask you please to go to the same Bundle it’s trial Bundle E2 page 207, do you have it Mr Thurling?
MR THURLING: I do.
MR COCKRELL: This is a different agreement this is the sale of shares agreement but what I’m interested in for present purposes is purely clause 8 which is describing the directors of Kenilworth Racing in the event that the trust were to acquire all of the share capital in Kenilworth Racing. What clause 8.1 is telling us is that the trust undertakes in favour of WPRC, we know that’s the Western Province Racing Club, that with effect from the effective date – that’s after implementation of the merger – the trust will use all reasonable endeavours to procure that the Board of Kenilworth Racing will be comprised of directors not less than one-third of whom shall be persons nominated by the Western Cape Chapter for appointment to the Board from time to time. If we turn over the page please Mr Thurling to clause 8.2.2 we see that the first directors nominated by the Western Cape Chapter to the Board, the Board of Kenilworth Racing, in terms of the clause I’ve just read to you “shall be Robert Bloomberg, Vidrik Thurling and Hassan Adams” does that
Attached files Competition Tribunal - Kenilworth Gold Circle - 18 10 12 NONconf.doc (286.5 KB)Â
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