RCC to lose headquarters

CABINET has instructed a government agency that owns MTC and Telecom Namibia to buy the Roads Contractor Company’s head offices – valued at N$100 million – to stop a bank from repossessing the building.

RCC, a state-owned civil engineering outfit, has been in the red for the past few years and is heavily reliant on government bailouts to stay afloat, including paying salaries.

The parastatal is now at risk of losing its head offices to Bank Windhoek after it failed to pay a N$105 million loan. The head office is situated in Windhoek’s Southern Industrial area, opposite M&Z Motors. The 5,3 hectares’ on which the offices are built can accommodate around 175 houses on plots measuring 300 square metres each.

The RCC’s failure to repay the loan, forced Bank Windhoek to drag the national roads agency to court to repossess the offices.

Documents seen by The Namibian show that Cabinet stepped in last week, and directed Namibia Post and Telecommunications Holdings (NPTH) – the entity that owns 100% of MTC and Telecom Namibia on behalf of the government – to buy the property from RCC.

A valuation report of the property by Frederick Frank-Schultz, which was requested by NPTH, shows that the RCC headquarters is worth N$104 million.

The RCC would use the proceeds of the sale to repay the Bank Windhoek loan, and then rent the building from NPTH.

“It was agreed that the process where the NPTH purchases the property [RCC headquarters] should proceed,” public enterprises minister Leon Jooste wrote to his transport counterpart, John Mutorwa, on Monday last week.

According to Jooste, the RCC tried negotiating with Bank Windhoek on 18 June 2019, but the matter was postponed to today.

“NPTH and RCC must inform Bank Windhoek that the NPTH intends to purchase the property at a fair market value [this must be done before 8 July 2019],” Jooste said, adding that an offer to purchase has to be concluded, including an indication that the finance ministry will have to approve the transaction.

“Dear colleague, I have full understanding for the RCC board’s dilemma, but I am concerned that unless swift action is taken, the government as the shareholder will lose a valuable, strategic asset, and I firmly believe this should be avoided at all cost,” Jooste wrote to Mutorwa.

Jooste said in the letter that the RCC’s future is still being discussed at Cabinet level.

“If Cabinet were to recommend that the RCC should continue [rather than liquidation], an applicable arrangement can be made to return the property to the company, as may be required. The RCC should, therefore, not attempt further mediation with Bank Windhoek,” he added.

Some RCC bosses have over the years accused the public enterprises ministry of pushing for the closure of the engineering company.

The latest move to wrestle away the RCC’s head offices could be seen by some as a way to cripple the company, but Jooste has a different view, saying he expressed concerns in the delays to save the property.

“I will be very disappointed if we (government) were to lose this property as a result of inaction after the matter was collectively deliberated upon by the Cabinet committee on treasury, and the ministers of transport, information and public enterprises to protect the interests of the state,” Jooste told The Namibian yesterday.

He said he was informed on Friday that the RCC board had asked for more time to obtain a legal opinion and clarity on the decision to sell the head office.

Asked whether the government is not going to overpay for a property for the sake of paying the bank, Jooste said Cabinet instructed NPTH and the RCC to get independent property valuations to determine the market value of the property.

According to Jooste, the transport minister (Mutorwa) had obtained the legal opinion from the attorney general on the matter. The decision to sell the RCC building to NPTH comes four years after Cabinet decided to get rid of the telecom holdings company. It is unclear who will own the property when NPTH ceases to exist.

Jooste said the dismantling of NPTH “is still some way down the line, and they are in the meantime the ideal vehicle to purchase this property”.

RCC MESSED UP

Mutorwa, the political head of the RCC, told The Namibian on Saturday that the RCC issue has placed the government between a rock and a hard place.

“It is a difficult issue, like choosing between two devils. I’m sure you know that the RCC is in deep trouble,” he said.

The minister confirmed that a Cabinet committee decided last month to rescue the property from being repossessed by the bank by asking NPTH to buy it. “If the RCC can recover, they can buy it back,” he reasoned. It is not only the RCC which is on the ropes. There are also plans to review the future of the national airline, Air Namibia.

“The RCC and Air Namibia messed up,” Mutorwa said, adding that there is, however, still hope.

It is unclear how many workers are employed at the RCC, but estimates in 2018 were at 400, while Air Namibia had around 700 workers.

He added that there will be a Cabinet meeting tomorrow to make recommendations on the future of the two entities.

The Namibian reported last month that senior government officials are discussing a proposal to rescue the Roads Contractor Company, including giving the state agency N$280 million road maintenance contracts over the next five years.