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COMPANY COMMENT: HCI’S WHITE KNIGHT TO CHECK ITHUBA’S WOES

09 Jun General

EVERYONE knows that empowerment conglomerate Hosken Consolidated Investments (HCI) is dead keen on the local gaming sector. HCI owns the biggest shareholding in casino giant Tsogo Sun, as well as a controlling stake in alternative gaming specialist Niveus, which has limited payout machines, electronic bingo, sports betting and a share of the new Kuruman casino.

One might argue that there’s not much more for HCI to wager on in the gaming sector. But, lo and behold, the company’s latest interim financial statements revealed it has clinched an agreement to fund the National Lottery by way of a high-yielding five-year preference share and loan.

The new operator, Ithuba, has officially commenced operating the lottery — with some well-documented teething problems frustrating Lotto players at the weekend. HCI, it seems, has opportunistically stepped in as a white knight. Because the lottery licence is subject to legal challenge by the outgoing operator, Gidani, it was difficult for Ithuba to secure the necessary funding for its operations.

HCI noted that “while all litigation carries risks, we see little merit in the challenge ….” No detail of the loan was disclosed in the financial statements. But there will be considerable interest (excuse the pun) in just how high HCI has set the high yielding preference shares — and whether these are convertible into equity.

Source: Business Day – BDLive