Desert Star: Pipe dream or feasible?

Desert Star, a company that promised to invest in a multi-billion dollar film-making industry, was evicted from office premises this week for failing to pay rent, raising doubt about their claims of turning Namibia into ‘Africa’s Hollywood’.

Questions have already been raised whether Desert Star’s purported investment in the film industry is a scam or a veiled property scheme.

In October last year, Desert Star threw a red-carpet event, complete with all the glitz and glamour for politicians and business leaders. Themed ‘The Night of the Stars’, Desert Star presented their vision – to make Namibia a spectacular motion picture destination.

But now, the ambitious institution seems to be in hot water after their working basement, River Crossing Lodge distanced themselves from Desert Star, due to money owed.

Andrew Gillies, a shareholder in TLP Investments 93, who owns the lodge told The Namibian that Desert Star owed them up to N$540 000 for October and November rent as well as for other obligations.

Gillies said Desert Star signed a contract late last year for an option to buy the lodge for N$25 million, however no payments have been made as agreed.

Gillies said that on Wednesday, Desert Star was kicked out of the lodge located three kilometers outside Windhoek.

Keane Harvey, head of Legal Affairs at Desert Star, confirmed they owed the lodge but declined to mention the amount, saying only that negotiations are still under way.

They expect significant capital inflow soon, which will ease any “cash-flow challenges” now experienced.

Failure to pay relatively small amounts has only increased skepticism whether Desert Star has a genuine and workable idea.

Desert Star has reportedly held only three meetings with filmmakers, who are supposedly the core of their business.

“Some people think it’s a fishy idea and a property real estate scheme for trying to get land,” said a film maker who preferred not to named.

A person who attended public meetings where the company was inviting investors said she is not quite sure what Desert Star want to do, but described their plans as “unrealistic”.

In question, particularly, is the formula called fractional owner- ship Desert Star is using to raise funds for their company.

The presentations focussed mainly on real estate and not film, ac- cording to the person familiar with Desert Stars’ investment drive.

Harvey said the real- estate offerings known as Motion Picture Resorts, include both luxury accommodation and film- making facilities as the business model, adding that neither aspect is less important than the other.

Harvey said about over 25 companies, private equity groups and private investors are their investors, adding that the source of their funds is primarily from the operation of their own businesses, although it is not clear at this time, what those businesses that are generating revenue are.

He said their financial statements to the end of December 2010 show that approximately N$18 million has been raised from Namibian investors, compared with the N$650 million which is currently being raised internationally.

Harvey however said Desert Star’s priority is in the south at the moment and people can expect to see the first film studio in 2012, and that most other councils have not yet been approached. This would detract from the focus on Desert Star South,” he said.

Desert Star was planning to receive financial backing from the Government Institutions Pension Fund (GIPF), an institution that has been marred by controversy in the past years.

“Desert Star was considering listing on the Development Capital Board, which may have resulted in the GIPF being a possible source of investment, but these plans are currently on hold and will be reconsidered in 2012,” Harvey said.

Asked about the relationship with the film- makers in Namibia, Harvey said they have planned meetings with film associations, including the Namibia Film Commission (NFC) and Filmmakers Association of Namibia (FaN), both who have representatives the Desert Star Advisory Board.

“There is nothing to engage filmmakers about at this stage. In any event, we are in frequent contact with many filmmakers in Namibia and will include them fully in due course,” he said.