2006-11-13Staff Report 2 "By Mbatjiua Ngavirue WINDHOEK The N$54-million B1 City Mall development appears to be in trouble after a financial institution pulled the plug on funding for the project for unexplained reasons. Sources familiar with the project say owners /Ae//Gams Engineering (Pty) Ltd is desperate for new funding and has approached several potential new lenders for a N$52-million loan. Work on the main structure of the project came to a standstill over a week ago after workers allegedly employed by a Chinese sub-contractor downed tools. Employees working for other sub-contractors on the site say the workers had not received their wages for the past three months. The identity of the Chinese sub-contractor could not be established and the company appears to have disappeared without trace. Neither the Chinese embassy nor the main contractor, the Roads Construction Company (RCC), could shed any light on the name of the company. The ambitious B1 City project includes a large shopping mall, service station, truck stop and long-distance taxi rank on the strategic corner at the intersection of Independence Avenue and the B1 highway. Two financial institutions including Old Mutual's MIDINA Fund (Managing Infrastructure Development in Namibia) were originally intended to fund the development, with the other lender as yet unknown. Old Mutual Managing Director for African Operations Johannes !Gawaxab yesterday said he was not aware of Old Mutual withdrawing funding for the project, suggesting the problem may lie with the other financier. !Gawaxab pointed out that Old Mutual's funding agreement is with the RCC and that it has no direct relationship with /Ae//Gams Engineering (Pty) Ltd. David Imbili, Chairman of /Ae//Gams Engineering, on Friday said the project has only been stopped temporarily until the company signs a new financing agreement, which he expects to happen this coming week. ""We have already reached agreement with our equity partners, and we expect to conclude a financing agreement this coming week,"" he said. Imbili added that although some money has already been dispersed to the contractor, they did not want to risk going ahead without a formal financing agreement. He refused to disclose the identities of the other shareholders in /Ae//Gams Engineering, referring journalists to the Registrar of Companies. The Registrar of Companies could not provide any information as their files are all packed in boxes while their offices are being renovated. The Roads Contractor Company issued a short statement last week in response to enquiries, answering some questions while avoiding others. RCC stressed that its role was only that of developer and main contractor for the B1 City development, with /Ae//Gams Engineering being the owners. ""The project has hitherto been financed with a bridging facility which has unfortunately been exhausted. It was anticipated that the main loan agreement would have been concluded by now. ""Unfortunately there have been technical delays in finalising the loan agreement which has resulted in the temporary stoppage. We are confident that the outstanding issues will be resolved shortly,"" the RCC said. The RCC statement appears to contradict earlier speculation that the parastatal may have committed large amounts of its own money to the project, and that this may have led to the suspension of former CEO Kelly Nghixulifwa. The RCC may not be the main financier of the project but it is common for developers to advance large sums of their own money to a project in expectation of being reimbursed by the owners. At this stage, it is not clear whether RCC is owed any money by /Ae//Gams Engineering, and if so how much, or whether its exposure to the project may threaten the solvency of the RCC itself. The statement released by RCC Manager: Corporate Affairs Gernot de Klerk, indicates the RCC is still bullish about the B1 City development. De Klerk said B1 City remains a ""viable and exciting"" project, giving the assurance that the developers, consultants and contractors remain committed to completing the project on time. He announced B1 City would be completed early in the new year with trading starting before the end of the first quarter of 2007, and that all the available rental space is already signed up." 2006-11-13Staff Report 2
