Durban - A South African company has made a move for Virginia Airport, offering eThekwini Municipality a R6.1 billion deal to develop the site with hotels, offices and upmarket homes.
In a statement on Thursday eThekwini spokeswoman, Tozi Mthethwa, said the unsolicited proposal was from Seaworld Investment Holdings.
A companies search showed that one of the directors of Seaworld Investment Holdings is Dr Xolani Mkhwanazi, the chief executive officer of Bateman Africa Limited and chairman of South Africa operations at BHP Billiton Limited.
Aaron Franks, the head of investment banking at Investec Private Bank, is also listed as an active director.
The proposal’s most attractive feature is that eThekwini would receive an equity value of 10% shares in the new “Seaworld City”.
eThekwini would also benefit from increased rates and taxes.
A big issue for the municipality has been the lack of appropriate revenue that city bosses felt they should be earning from operators.
Mthethwa said the municipality was not required to fund the development and would only offer its services and expertise in the implementation of bulk infrastructure and services.
The investment company would source funding and develop a brand new airport, five times the size of Virginia Airport in Scottburgh, she said.
The next step is input and comment from all affected parties, including ratepayers, the National Treasury, Provincial Treasury and the auditor-general.
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Once the City receives input and comments, a decision (on) whether or not to accept the unsolicited proposal will be made,” Mthethwa said.
The site is currently leased to operators for business and recreational aviation. They have been battling, unsuccessfully, since 2011 to pin the municipality down on 10-year leases.
Thursday’s statement from eThekwini dodged the issue.
“The council resolution, among other things, included ‘to consider the extension of the lease by a period not exceeding 10 years’. Considering an extension is not similar to a commitment to extend… no commitment was made and the city is not reneging on any agreement.”
But Dave McNaught, of the Durban Skyye Flight School, said the city urgently needed to deal with the problems at the airport and its proposed relocation, before considering a proposal like this one.
“It’s like receiving an offer on King Shaka International Airport or the city hall, and jumping at it just because it sounds exciting. This is premature,” McNaught said.
He called the site at Scottburgh “uselessly inadequate” and said it would not be sufficient for all the operators.
“We’ve been told in some of the meetings held every month that we might need to finance our own airfield there. Would they expect that of King Shaka?”
He said that if the deal was to go through and the operators at the airport were relocated, the inconvenience in terms of distance would be huge.
“You must remember that an airport does not exist for the benefit of a few private individuals, it is an important economic hub, which serves an entire region.”
He dismissed the city’s claims that the monthly meetings were productive.
“Telling us about their plans is not the same as negotiating. That doesn’t achieve anything.”
But Mthethwa said
plans were under way to relocate commercial flight operators to King Shaka with the flight school operators relocating to Scottburgh.
According to Mthethwa, city bosses and operators had met three times in the past year to discuss their future and Seaworld’s proposal,
In the meantime operators have been offered a new three-year lease or relocation to their new venues – if it was ready within the three years.
“The relocation of airport activities to King Shaka Airport or the Scottburgh site will clear a way for the redevelopment of the site into a facility that can generate an annual rate income for the city.”
Seaworld’s proposal had been assessed by a technical task team comprising city officials from supply chain management, development planning and the environment and management unit as well as the office of the deputy city manager for economic development and planning.
“The outcome of the assessment demonstrated that the proposal satisfies the minimum requirements in terms of Section 37(2) of the supply chain management regulations.”
Daily News