uShaka Marine World seek additional loan to stay afloat

The management of uShaka Marine World has asked Durban's executive committee for a further loan of R174,5-million to service its multimillion-rand debt.

The management needs to service the R200-million loan which was obtained from Citibank and the Development Bank of South Africa and was used to fund the building of the theme park.

The new loan facility, if approved by the committee, would be paid over seven years and city officials are optimistic that the park would be able to sustain itself afterwards.

The proposal to bail out the R700-million theme park, which is an integral part of the Durban Point Precinct Development Programme, was put before the executive committee meeting in Clermont on Tuesday.

Exco did not approve the recommendation, but requested that board members and the management of the theme park make a presentation before the committee on the financial situation of the facility.

This is not the first time the council has helped the Durban waterfront investment to stay afloat.

Late last year, Exco approved a R9-million loan to uShaka, mainly to meet the operational cost of running the facility.

The move was described as a temporary measure to assist the park to survive after experiencing cash-flow problems because of the late opening of some attractions.

Deputy Mayor Logie Naidoo said that the council had borrowed R150-million from Citibank and R50-million from the Development Bank of SA to fund the building of the theme park.

Naidoo, who is also the Chairperson of the Economic Development and Planning Committee, said the R174,5-million loan application would be used to service the R200-million loan because the management had realised that the park was unable to sustain itself.

"The R174,5-million will be used to meet our obligation in terms of servicing the bank loans we received for the building of uShaka.

"This money will be paid in stages from now until 2010, and after that we believe the park will be profitable enough to stand on its own," he said.

The report presented to Exco stated that various options that had been investigated by the newly appointed board, including alternative sources of finance, had failed to yield immediate results.

"The council has been approached to provide assistance in the form of a bridging loan financing facility to assist uShaka Marine World over the next seven years to meet the projected shortfall between the projected operating profit and loan repayments," said the report.

Councillors have acknowledged that the initial projections were not accurate, but they were optimistic that the park would turn the corner.

"Any new business is not profitable on day one and we need to assist the park until it is self-sufficient," said Naidoo.

S'bu Gumede, an Exco member, said: "This is a good asset. We thought it was going to sustain itself, but it is now clear they will need assistance."

DA caucus leader Lyn Ploos van Amstel said it was obvious that original financial projections for the park, which suggested that it would be self-sustaining from the outset, had not been realised and that the company was looking to the city for a substantial additional loan.

"No project of this magnitude ever works out exactly as anticipated," she said.

"However, a great deal of public money has now been invested in this project by the municipality and it is important that we do everything that can reasonably be done to support it and ensure its success."