Casino group gives more options to minorities in gaming asset buyout.

Casino group Tsogo Sun and Niveus Investments, both controlled by Hosken Consolidated Investments (HCI), decided on Tuesday to rejig the terms of a recent R4.6bn transaction involving alternative gaming assets.

In late 2016, Niveus accepted a scrip-based offer for its limited payout machine (LPM) and electronic bingo terminal (EBT) operations held in Vukani and Galaxy, respectively.

But it seems pressure from minority shareholders in Niveus has prompted key changes to the terms of the transactions.

Under the new terms Niveus’s alternative gaming assets will be packaged into a new company, Gameco, which will be unbundled to shareholders. Tsogo will then acquire HCI’s more than 50% stake in Gameco and offer to buy out Gameco minority shareholders.

The exchange ratio will be one Tsogo share for every 2.875 Gameco shares, with a cash alternative of R9.74 per Gameco share (equating to a floor price of R28 per Tsogo share).

The Gameco shares retained by Niveus (roughly 225-million Gameco shares) will be acquired by Tsogo in exchange for 78-million Tsogo shares – representing a value of R2.184bn.

There is an option for Niveus shareholders to retain their stakes in an unlisted Gameco. Tsogo has undertaken to apply for a JSE listing for Gameco within 12 months if minorities retain more than 20% of the company’s issued share capital.

Tsogo has limited the maximum cash payment to Gameco shareholders to R1.2bn. The casino group will therefore need irrevocable commitments from minority holders of at least 111.34-million Gameco shares to not accept the cash offer.

One minority shareholder in Niveus, who asked to remain anonymous, felt the revised terms were an improvement.

“I think most shareholders realised that the LPM and EBT operations have been growing faster than the traditional casino operations. The new deal provides a value underpin that should offer some reassurance to Niveus minorities.”

Vukani is the largest LPM operator in SA with more than 5,000 slots countrywide, while Galaxy has EBTs licensed in six provinces. Galaxy also operates the new Kuruman Grand Oasis casino in the Northern Cape.

After the gaming assets are stripped out, Niveus will hold its controlling stake in La Concorde (the remnants of the old KWV Holdings). La Concorde comprises mainly property assets – most notably the Laborie wine estate and the old KWV head office in Paarl — as well as a large collection of South African art.

Busienss Day – Marc Hasenfuss