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www.thevillagenews.co.za
11 December 2019
MY HOME
Preparing for the season of goodwill By Stephen de Stadler Managing Director Fine & Country Hermanus, Arabella and Kleinmond
F
or me this has always been the best time of the year. The school and university academic years are finishing; many businesses are preparing for their year-end breaks; and the annual migration to various coastal cities in South Africa is about to start. No matter your religious convictions, it really does feel as if ‘Santa Claus is coming to town’. The shopping malls are full of Christmas decorations and songs recorded by Boney M can be heard everywhere.
Every child in the country has suddenly been ‘good the whole year’ while their parents try to balance their budgets between an earlierthan-usual December pay date and a January one which feels so far away. This is the season for good food and drink, the company of family and friends, and a fair level of relaxation as
batteries are recharged for the start of the new year. Our country continues to experience wave after wave of perceived negative news, but within this process is a level of delivery which should not be underestimated. The announcement of a new CEO for Eskom and the placing of SAA into business rescue are important milestones in the regeneration of our state-owned enterprises, and a strong commitment by the government to deliver in terms of the mandate under which they were re-elected. I don’t have enough insight into the affairs of Eskom or SAA to pronounce with any certainty on the correctness of the decisions taken, but appointing a respected CEO with experience in restructuring to lead the transformation of Eskom seems to make sense. In addition, by placing SAA into business rescue, which is a method of facilitating the rescue of a financially distressed company, this airline may at least have a future. When a compa-
ny becomes financially stressed, the creditors of that company often have first call over any assets or income from the company. When they feel that the assets or income will be insufficient to either service the debt (i.e. meet the interest requirements) or repay the capital outstanding, the creditors may call for liquidation of the company.
to close the company down, creditors are generally assured of a better net return.
In that case the company often ceases to trade and apart from every staff member losing their job, the assets are often sold at below their real value as everyone scrambles to get a slice of an ever-diminishing pie.
Even if the decision is ultimately taken to sell SAA, under business rescue this can be done without any undue pressure from government or other parties that feel they have a right to dictate the future of the national airline. This is good news for everyone currently employed by SAA, and good news for the country as a whole.
In the business rescue environment, a business rescue practitioner is appointed to manage and run the company during the process of restructuring. Importantly, creditors are generally unable to place the company into liquidation during this process. The company thus continues to operate, with the aim of placing it on a sustainable growth path, to save as many jobs as possible, and even where a decision is ultimately taken
The business rescue practitioner will prioritise the development of a sustainable cash flow, so as to limit the current reliance on the already over-stretched coffers of the South African National Treasury.
With reference to the residential property market, there has been a marked increase in the level of enquiries over the past few weeks. The “buyers’ market” continues to be strong, but sellers who have been holding on until “the season” are being correctly price-counselled by the experienced and professional estate agents to look at more realistic selling
prices in this market. While real returns over the past two years have been negligible, those over the last seven years are still strongly positive. Correctly priced and appropriately marketed homes are still selling in relatively short time periods, as opposed to homes that are being offered at inflated prices. As explained to a client this week, the market determines the price, not the estate agent or the seller. The transaction of buying and selling a home is a highly emotional one, and whilst some investors may arrive at a viewing with a price based on land value and cost of improvements, most buyers of property first experience the home before deciding on whether the listed selling price is appropriate or not. Be realistic in your expectations, take the advice of people who live, eat and sleep this market, and let us use the season of goodwill as an opportunity to sell our lifestyle to those people who did not even realise they wanted it, until they hit our shores
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