- July 16, 2010
- Posted by: admin
- Category: Tsogo Sun Holdings
SUN International said yesterday that it would challenge a decision by the Western Cape Gambling and Betting Board to allow one of the four existing casinos in the province to move into the Cape Town metropole. providing stiff comperition to its lucrative GrandWest Casino for the first time.
The announcement comes only months before GrandWest’s 10-year exclusivity period to operate in the Cape Town metropole comes to an end. “We believe that there are grounds to have this decision reconsidered and will be making representations through the public process,” Sun International said in a Stock Exchange News Service announcement yesterday.
Grand Parade Investments (GPI). which co-owns GrandWest through a 29.24% stake in SunWest, followed minutes later with its own announcement. GPI is also likely to challenge the decision, with chairman Hassen Adams saying yesterday that the group would “engage the province on this decision, but we will not fight them on every issue”. The gambling board said the second casino would be located in an area “untapped by GrandWest and would not significantly impact on GrandWest’s revenues, as such relocated licence would be focused on the niche high roller and tourist market”. A possible site for the casino is the V&A Waterfront.
GrandWest. which cost Sun International a little more than Rlbn to build a decade ago. is a major money-spinner for both GPI and Sun International and the companies are no doubt concerned about the effect of a rival in their backyard. In the year to end-June last year, GrandWest churned out R1.642bn in revenue and earnings before interest, taxation, depreciation and amortisation of R675m. making the property the largest contributor to Sun International’s profitability.
The announcement, however, is likely to be welcomed by Sun International’s rivals. Gold Reef Resorts and Tsogo Sun. which are in the process of merging. The combined group will hold three of the five licences in the province, with the Mykonos Casino, Caledon Casino and Garden Route Casino. Sun International holds the other two licences with the GrandWest and Golden Valley casinos.
Late last year. Gold Reef had suggested to Western Cape finance MEC Alan Winde that the issue of an exclusive casino licence in the Cape Town metropole be reviewed. CEO Steven Joffe said at the time he was eager to explore the possibility of moving its Mykonos Casino in Langebaan closer to Cape Town. The gambling board has so far provided few details of its decision and those in the casino sector are still in the dark as to where a second casino would be opened and what conditions would be attached to such a licence. This will be key in whether either Sun International or Tsogo will bid for the licence.
Mr Winde is expected to make an announcement later today on the
Mr Hassen said the licence would have to be attractive enough for either group to want to relocate its existing casino. “It would have to provide enough
Source: Business Day – Julius Baumann