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Saturday 18 May 2024

Vic Falls under fire over irregular land sale

 TOP Victoria Falls City Council officials were this week alleged to have unprocedurally extended payment deadlines for the sale of a US$2,8 million commercial stand to Midlen Investments, which plans to construct a luxurious Arab-themed hotel, the Zimbabwe Independent can exclusively reveal.

Documents gleaned by this newspaper showed that  Victoria Falls City Council on January 8 published a notice for the sale of stand number 1815, which bid was awarded to Midlen at a cost of US$2,8 million.

Terms of the lucrative deal indicate that Midlen was obligated to pay a 30% deposit, amounting to US$840 000 by April 30.

However, investigations by this publication show that the local authority bosses extended the deadline to June 30 without a full council resolution as required.

This was after Midlen had failed to pay its deposit within the required time-frame.

Under such circumstances, as spelt out by local governance dictates, rights awarded to the winning bidder are forfeited if the party fails to meet terms of the agreement.

Subsequently, the second most competitive suitor is given the green light to purchase the property. In the case of the stand in question, the Zimbabwe Stock Exchange-listed leisure giant, Rainbow Tourism Group (RTG) came second, with a US$2,5 million bid.

A company called Hillfonic Investments was vying for the same asset, while MJ Air weighed in with US$2,4 million. As documents show, the balance for the purchase of the land would be serviced within 18 to 24 months after the deposit is paid.

“A Call for Expression of Interest (VFCC/S1815/0124) (the CFEOI) to purchase and develop commercial land being Stand 1815 Victoria Falls (the Investment Property) was made by the City of Victoria Falls on the 8th of January 2024 in terms of Section 152 of the Urban Councils Act (Chapter 29:15),” the documents read in part.

“Midlen Investments (Private) Limited (the Company) participated in the CFEOI and was selected as the winning bidder upon adjudication by the City of Victoria Falls.

“The City of Victoria Falls requires a 30% deposit (US$840 011) for land purchase. The

amount is payable strictly in United States dollars and is due by the 30th of April 2024.

“The balance of US$1 960 026 is to be paid over a period yet to be discussed with the City of Victoria Falls. Indications are that it will be paid over a period of 18 to 24 months in equal quarterly instalments. No interest accrues on the balance,” the documents state.

Midlen managing director Ngonidzashe Manjeru told the Independent that his firm was given the extension to settle the deposit to the Vic Falls City Council.

He did not specify whether the extension was granted by the local authority management or by a full council.

“We are on course for the settlement of the purchase price, we applied for extension of time,” he said this week.

“At this stage I think I have given you enough information. We are not privy to such technicalities and council processes.”

The mayor, Prince Thuso declined to comment on how the decision was made.

He told the Independent: “Council is passionate about development and is on a crusade to lure development to the City of Victoria Falls.”

“Midlen Investments won a bid to develop a hotel in Victoria Falls. More details about the development will be made public as the development unfolds.”

Thuso’s responses were addressing questions posed by the Independent focusing on whether the decision to extend the payment deadline was made by management or a full council. This publication also questioned the mayor on whether a due diligence exercise was conducted on the suitability of Midlen.

A source close to the transaction said management acted unilaterally when it gave Midlen the extension.

“As councillors, we are not aware of any extension, unless the extension was given by management without council resolution,” the source said.

“Management officials extended it without seeking council approval.

No item was ever brought to the attention of council or any of its committees for consideration to vary that standing policy of council.

“It is improper. It is not binding. The second best bid should be given the offer. A bid by a leading hotel group in the country came second though it was dismissed.

“Management tends to offer these tenders to companies owned by dubious characters. They shun big corporations because they do not have room to budget for bribes,” the source told the Independent on condition of anonymity.

Town Clerk Ronnie Dube had not responded to questions posed by the Independent at the time of going to print.

A search at the Companies Registry in the capital shows that Midlen was registered in Bulawayo in 2008 under company number 27006.

Outside the purchase price, Manjeru said Midlen would mobilise US$121 432 347 to build a six-star hotel tailored to attract “high end clientele including those of the Muslim religion”.

“Our bid, which was the highest evaluated bid and the winning bid among the five  bidders was as follows: US$2 800 037 for the purchase of the land and US$121 432 347 for the development of the proposed hotel. The total bid value was US$124 234 382,” he said.

“The proposed hotel construction is going to be funded through investor funds. The proposed hotel is going to be the first six star hotel in Zimbabwe and the first to be Halal compliant, targeting the high-end clientele including those of the Muslim religion.

“The proposed hotel is set to be completed within the next 24 months, all things being equal.”

Documents seen by this publication indicate that Midlen would dispose of 99% of its equity to a financing partner in a transaction valued at US$3,3 million.

As documents show, an evaluation done by Bard Real Estate pegged the value of the asset at US$3,5 million.

“It is proposed that the financing partner subscribes for 99% shareholding in the company for a consideration of US$3 300 037,” excerpts from documents viewed by this publication read.

“The promoters obtained a copy of a valuation report of the investment property by Bard Real Estate, which placed the value of the investment property at US$3 550 000 translating to US$216,95 per square meter.”

If Midlen’s transaction sails through, the outfit claims that it will build a hotel targeting “the princes and the Arabic elites who are used to a high end, luxurious lifestyle, the types that travel in expensive private jets but are strict subscribers to and observers of the Islamic Halal laws”.

Source: Vic Falls under fire over irregular land sale (17/05/24)

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