Battle for Sesriem is on
With 90 days before the opening of the Sesriem facility by Sun Karros and with bookings confirmed, NWR has cancelled the joint-venture agreement.
Sun Karros Lifestyle Safaris is bringing an urgent application before the High Court on 24 April after Namibia Wildlife Resorts (NWR) on 7 March “irrationally and capriciously” terminated a joint-venture (JV) agreement between the two companies.
Sun Karros had papers delivered to NWR and environment minister Pohamba Shifeta, as second respondent, last week.
In his founding affidavit, Jacobus Marthinus Struwig, managing director of Sun Karros, says they have invested more than N$43.4 million in the construction of a glamour camping (glamping) resort at Sesriem, one of five to be constructed in terms of the JV that was signed on 11 June last year. Construction at the site is continuing as the facility is set to open on 1 July this year.
Struwig mentions the successful Daan Viljoen and Mile 14 public-private partnerships, saying that the two companies had a long-standing relationship dating back to mid-2008 and that Sun Karros had brought great benefit to NWR with the creation of improved facilities.
The JV signed in 2018 was to last for 30 years with either party having the option of terminating or renewing the agreement and moreover, that “Sun Karros would contribute all the money need to develop and build” the camping facilities.
PA signed letter
According to Struwig, he received the cancellation notice on 7 March, “instructing Sun Karros to cease all works in connection with the agreement with immediate effect. The cancellation notice was addressed following a resolution taken by the board of directors … but did not provide any reasons as why the board had come to such a decision”.
The letter was signed by the personal assistant of NWR managing director Zelna Hengari.
“I point out that Sun Karros has never been in breach of the JV and up until the receipt of the cancellation notice, the parties had been working in complete harmony,” Struwig writes.
The decision was made one week before the end of the board's tenure, although it was extended for two months by Shifeta.
“Having being caught completely off guard by the content of the letter, I telephoned Zelna Hengari to discuss the matter and obtain clarity.”
Struwig says Hengari informed him that she was at the ITB in Berlin and “that she had been informed by her personal assistant that a cancellation letter had been signed on her behalf by her PA at the request of the board”.
“From the gist of the conversation and the inference I drew, Ms Hengari sought to create the impression that she did not actually know about the letter or that it would be sent. As it is, I found her response evasive.”
He says he found it strange that a document of such significance and with such consequences would have been signed by anyone other than a board member.
“By any yardstick, the matter was not time sensitive and if it had waited a few days longer for Ms Hengari's return or for any other board member to sign same, it would not have compromised or prejudiced NWR's position – whatever that position may be.”
NWR mum
Struwig wrote a letter to NWR on 12 March asking, among other things, that the cancellation notice be withdrawn by Friday 22 March. It also addressed a letter to the environment ministry to intervene “in an attempt to avoid further ramifications and a major tourist embarrassment” for the country.
To date, NWR has not responded to that letter and the ministry advised Sun Karros to approach the NWR board to solve the problem.
Sun Karros had started investing in the Sesriem project as far back as August 2017. Construction is under way and reservations by international tour operators have already been confirmed and paid for.
“Should construction not continue, the Sesriem camps will not be ready by July 2019 and the current bookings will not be honoured,” Struwig writes in his affidavit.
As at 15 March, the total value of reservations stood at just under N$4.8 million.
Struwig says the reputational damage to Sun Karros, should the facility not open, will have a direct impact on all its other business ventures as it is almost entirely dependent on foreign tour operators.
“Sun Karros, which has pre-existing and current relationships with all of the tour operators who concluded bookings, also stands to suffer severe reputational harm if these bookings have to be cancelled.” He added they would not bring bookings to any Sun Karros facility again.
Losses to be massive
“The long-term financial loss for Sun Karros would be enormous. The total forecast profit on the Sesriem camps over the 30 years of the JV were calculated to be in excess of N$480 million, of which half would have gone to NWR and half to Sun Karros. This is not factoring in the profits that could be lost in respect of the remainder of the camps which are still to be constructed in terms of the JV which cumulatively will run into hundreds of millions of dollars,” Struwig says.
He estimates that about 150 jobs will be lost.
“The only explanation I can give for such conduct is that NWR acted irrationally and capriciously with no regard for the broader Namibian economy and the damage to the brand 'Namibia' in a highly competitive tourism market,” Struwig says, adding that the “motive or agenda” is highly prejudicial to NWR.
Struwig also says that Sun Karros reserves its right to look to all NWR board members involved in the decision to cancel the JV.
“The Sesriem camps are building sites at this time. If construction has to cease there are huge standing costs involved and those will be damages running into hundreds of thousands of dollars.”
Sun Karros will ask for an order to set aside the cancellation agreement along with various alternatives, including permission to sue NWR.
The law firm Fisher, Quarmby and Pfeifer acts as counsel for Sun Karros.
YANNA SMITH
Sun Karros had papers delivered to NWR and environment minister Pohamba Shifeta, as second respondent, last week.
In his founding affidavit, Jacobus Marthinus Struwig, managing director of Sun Karros, says they have invested more than N$43.4 million in the construction of a glamour camping (glamping) resort at Sesriem, one of five to be constructed in terms of the JV that was signed on 11 June last year. Construction at the site is continuing as the facility is set to open on 1 July this year.
Struwig mentions the successful Daan Viljoen and Mile 14 public-private partnerships, saying that the two companies had a long-standing relationship dating back to mid-2008 and that Sun Karros had brought great benefit to NWR with the creation of improved facilities.
The JV signed in 2018 was to last for 30 years with either party having the option of terminating or renewing the agreement and moreover, that “Sun Karros would contribute all the money need to develop and build” the camping facilities.
PA signed letter
According to Struwig, he received the cancellation notice on 7 March, “instructing Sun Karros to cease all works in connection with the agreement with immediate effect. The cancellation notice was addressed following a resolution taken by the board of directors … but did not provide any reasons as why the board had come to such a decision”.
The letter was signed by the personal assistant of NWR managing director Zelna Hengari.
“I point out that Sun Karros has never been in breach of the JV and up until the receipt of the cancellation notice, the parties had been working in complete harmony,” Struwig writes.
The decision was made one week before the end of the board's tenure, although it was extended for two months by Shifeta.
“Having being caught completely off guard by the content of the letter, I telephoned Zelna Hengari to discuss the matter and obtain clarity.”
Struwig says Hengari informed him that she was at the ITB in Berlin and “that she had been informed by her personal assistant that a cancellation letter had been signed on her behalf by her PA at the request of the board”.
“From the gist of the conversation and the inference I drew, Ms Hengari sought to create the impression that she did not actually know about the letter or that it would be sent. As it is, I found her response evasive.”
He says he found it strange that a document of such significance and with such consequences would have been signed by anyone other than a board member.
“By any yardstick, the matter was not time sensitive and if it had waited a few days longer for Ms Hengari's return or for any other board member to sign same, it would not have compromised or prejudiced NWR's position – whatever that position may be.”
NWR mum
Struwig wrote a letter to NWR on 12 March asking, among other things, that the cancellation notice be withdrawn by Friday 22 March. It also addressed a letter to the environment ministry to intervene “in an attempt to avoid further ramifications and a major tourist embarrassment” for the country.
To date, NWR has not responded to that letter and the ministry advised Sun Karros to approach the NWR board to solve the problem.
Sun Karros had started investing in the Sesriem project as far back as August 2017. Construction is under way and reservations by international tour operators have already been confirmed and paid for.
“Should construction not continue, the Sesriem camps will not be ready by July 2019 and the current bookings will not be honoured,” Struwig writes in his affidavit.
As at 15 March, the total value of reservations stood at just under N$4.8 million.
Struwig says the reputational damage to Sun Karros, should the facility not open, will have a direct impact on all its other business ventures as it is almost entirely dependent on foreign tour operators.
“Sun Karros, which has pre-existing and current relationships with all of the tour operators who concluded bookings, also stands to suffer severe reputational harm if these bookings have to be cancelled.” He added they would not bring bookings to any Sun Karros facility again.
Losses to be massive
“The long-term financial loss for Sun Karros would be enormous. The total forecast profit on the Sesriem camps over the 30 years of the JV were calculated to be in excess of N$480 million, of which half would have gone to NWR and half to Sun Karros. This is not factoring in the profits that could be lost in respect of the remainder of the camps which are still to be constructed in terms of the JV which cumulatively will run into hundreds of millions of dollars,” Struwig says.
He estimates that about 150 jobs will be lost.
“The only explanation I can give for such conduct is that NWR acted irrationally and capriciously with no regard for the broader Namibian economy and the damage to the brand 'Namibia' in a highly competitive tourism market,” Struwig says, adding that the “motive or agenda” is highly prejudicial to NWR.
Struwig also says that Sun Karros reserves its right to look to all NWR board members involved in the decision to cancel the JV.
“The Sesriem camps are building sites at this time. If construction has to cease there are huge standing costs involved and those will be damages running into hundreds of thousands of dollars.”
Sun Karros will ask for an order to set aside the cancellation agreement along with various alternatives, including permission to sue NWR.
The law firm Fisher, Quarmby and Pfeifer acts as counsel for Sun Karros.
YANNA SMITH
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