Robert Bloomberg writes that he hereby advises of his immediate resignation as co-chairman and director of Kenilworth Racing (“KR”).
I respectfully wish to place the following on record in amplification hereof.
I have been a Western Cape (“WC”) director for some 12 years and a founding director of KR (together with Vidrik Thurling) since 22 September 2011, after the two of us played an integral part in the demerger from KZN.
The deal which we negotiated included inter alia, the entrenchment of a 26% share of the national stakes pot despite our actual turnovers being substantially less, and which can only be altered with the unanimous consent of the KR Board, ensuring that a stakes equalization fund was established which in essence stated that after the first 3 years that KR could “suffer no losses”, and which losses are deducted from the gross Phumelela national stakes pot through a Sustainability Agreement with the RA, having all our properties transferred back to KR notwithstanding that KR only owned 25% of the shares in the Gold Circle (”GC”) company, as well as the safeguarding of our assets through ownership thereof by The Thoroughbred Horseracing Trust. In respect hereof, I am immensely proud.
Whilst I have only been at the helm for 18 months, these have been excessively stressful and difficult times exacerbated by largely unanticipated eventualities beyond our control.
It is no secret that KR is asset rich, but cash poor.
To this end, and with Phumelela’s “fall from grace,” thereby being unable to provide KR with any “working” capital in terms of the commitment they had made to KR, the advent of COVID-19, and the cessation of racing for more than two months, together with the existing closure of betting shops both locally, and internationally, we were always going to be majorly cash-strapped.
We have explored many different avenues for funding, including our bankers, as well as various significant role-players in racing, both locally and abroad, but to no avail.
As a result of KR’s widely known financial difficulties, which had been extensively debated in the “open market,” MOD eventually through their mandated Task Team, made a loan proposal to KR, on 29 May 2020.
Whilst the initial proposal was fraught with conditions which could not be complied with due to their onerous and stringent nature, which posed serious questions as to the element of “control”, and which repayment terms would have placed the company in a position where we would be deemed to be trading recklessly and negligently, this loan was in rather poor taste as it was coupled with a “bolt from the blue” suspensive condition to the money being made available, of my resignation or termination as both chairman and director, on agreeable terms.
Whilst the repayment terms have subsequently been significantly adjusted, the oppressive interest terms remain.
Also, the encumbrance of any property, a condition of the loan, requires approval by the Western Cape Gambling and Racing Board (“WCGRB”).
It cannot go unnoticed that Hollywood have loaned GC R40 million, which is considerably more than the proposed loan to KR, but their goodwill is such, that the loan is unsecured, despite GC’s assets being worth substantially less that KR’s assets, and the interest terms are substantially lower.
My personal opinion, although the Task Team will beg to differ, is that the magnitude of the offered loan as it currently stands is wholly insufficient and cannot possibly last the calendar year and should rather be used as post-commencement finance for business rescue which as far as I am concerned should, for legal and further reasons that I am precluded from enunciating further on, be an absolute necessity for KR at this moment in time.
However, I will not be part of any decision-making process when ultimately this gets debated by the remaining directors after presumably thrashing this out with the Task Team representatives, who actually should not even be part of the discussion and certainly not part of a KR Board decision in this regard.
It is the prerogative of any lender to place any terms and conditions on any loan, irrespective of the fairness and rationality aspect hereof.
In terms of my fiduciary duties as a director of the company, I cannot, and never have, placed myself ahead of what is in the best interests of KR especially with the company “staring down the barrel” of a significant deficit for the month of July and indeed for the financial year.
Whilst it would be most beneficial for KR if I were to remain on board for a few more months, which would in all probability have been agreed upon, I find the pe-requisite demand for my retirement, borderline extortionate, insulting and untenable and am not here to be a stop-gap for the Task Team as I would have no self-respect or dignity if I continued on an interim basis. I believe that having committed more than three decades of my life to WC and SA racing, that at the very least, I deserve to leave on my own terms, hence my decision to exit now.
I am informed that “personality clashes” are the foundation of all of this which is a great pity as apart from the fact that I have had minimal interaction with members of the Task Team, I have always been willing to work with anyone in the best interests of our sport, irrespective of our personal opinions of each other.
There is a vast difference between stating that you do not believe that you can work with someone, when in reality you have not even really tried, and choosing not to work with someone, thereby, and in my opinion, abusing power that has been conferred upon you. Be that as it may, it is what it is.
I had accordingly a few weeks ago, decided to resign on 19 June 2020, and had advised my Board thereof, as this was the day after my last committed meeting with the WCGRB, and with whom on behalf of KR, I have had an excellent relationship for around a decade, founded on mutual respect and trust. I therefore owed them an explanation as to my intended departure which they are distinctly unhappy about.
Simultaneous with my resignation as chairman and director, I have also voluntarily ceased all executive and professional services rendered to KR despite this not forming part of the suspensive conditions of the loan.
In this regard, I wish to record, that I was specifically requested by both Phumelela Executive Management and the KR Board, in July 2019, to act in an executive and legal capacity, when required, and which I have been so-doing for the last 10 months.
There has been virtually non-existent management of KR during this time period, from both within KR due to our financial constraints, but more importantly from Phumelela who still have a Management Agreement with KR.
The situation will for now be severely accentuated by my forced absence.
On a positive note, I have, together with Dean Finder (who is resigning simultaneously with me), brought the extremely professional, Mervin Gamble, on board as an independent consultant from 25 May 2020, and he has already proven to be an invaluable asset to KR in streamlining our numerous retail and betting outlets.
I must stress that the loyalty and support shown to me by the vast majority of the KR Board has been overwhelming and unbelievably humbling and I am indebted to them for that and which will never be forgotten by me.
I have assisted in the foundation of a number of exciting potentially significant income accruing ventures and sponsorships that we have in the pipeline, which I trust that the Task Team/MOD will see through to fruition in the best interests of KR. In addition, and now that funding will hopefully be made available, KR will have to make some urgent appointments to key positions in ensuring that the many different functions that I was fulfilling are dealt with.
I continue to believe that the only way forward for the sustainability of racing in this country, is under one “umbrella” through a Newco, with a Raceco and Propco attached thereto, whereby all the Operators and other organizations throw their assets into a collective pot, where we grade our racecourses, have in-season and out-of-season stakes, and race for equal stakes and in unison, free of any parochialism and provincialism, but none of this can ever happen when people are being divisive and causing disunity.
The vehicle most suitable for this Newco is undoubtedly KR, due in the main to its roughly 35% international ownership base, around 80% of the top stud farms being in the WC and the position of the quarantine station on Kenilworth racecourse. For these very reasons, if KR fails, racing in this country will fail.
My heartfelt thanks go out to those of you who have supported me so unconditionally with the knowledge that I would always fight for what was equitable and just, in the best interests of the WC and horseracing holistically in SA and in which capacity it has been an honour and a privilege to serve.
Robert Bloomberg
19 June 2020
