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TSOGO SUN GETS NOD FOR SUN INTERNATIONAL CASINO STAKES

SUN International and Tsogo Sun, SA’s largest hotel and gaming companies, have passed the first hurdle in a casino reshuffle that will see Tsogo acquire a 20% stake in two casinos in the Western Cape.

Sun International said on Monday that shareholders of its employee trust scheme had approved the transaction, clearing the way for Tsogo to acquire a partial interest in the Sunwest International and Worcester Casino.

Tsogo Sun would buy a 10% stake from Sun International for R675m and another 10% stake from Sun’s empowerment shareholders Grand Parade Investments for the same amount.

The company had already paid its first instalment of R35.7m, Sun International said.

The approval from Sun International’s employee trust scheme was necessary as the deal would see it waive its pre-emptive rights. What remains is the go-ahead from shareholders of Grand Parade, which is expected by no later than June 30.

The deal, which will see Tsogo Sun increasing its footprint in the Western Cape, where it has little exposure, was first announced in 2014, but reservations from competition authorities caused it to fall through.

Under the old structure, Tsogo Sun was to buy a 40% stake in the two casinos for R2.2bn.

The deal would have given Tsogo, which already controls the Mykonos, Garden Route and Caledon casinos, overall influence of five Western Cape casino licences. Under the new terms adjusted to satisfy the competition authorities, Tsogo Sun’s stake was reduced to 20%.

The minority interest would not give it representation on the boards of SunWest or Worcester, nor would it have influence in the management of the company. It is unlikely that shareholders of Grand Parade will reject the transaction, given the company’s stated intention to improve its food services.

Analysts have said that Grand Parade may be keen to sell its casino interests and use the cash proceeds to fund the expansion of Burger King and Dunkin’ Donuts.

In the event that Grand Parade shareholders do resist, Sun International would sell Tsogo another 10% stake, reducing its ownership in Sun West and Worcester to 51.60% and 51.40%, respectively.

Source: BDLive – Fifi Peters