BATTLE RAGES FOR CONTROL OF LUCRATIVE LOTTO

JOHANNESBURG – National lottery operator Ithuba and Hosken Consolidated Investments (HCI), the owners of Tsogo Sun, are embroiled in a bitter legal battle for control of the lucrative lottery business – with HCI demanding R5 million a month from Ithuba in management fees.

At the heart of the dispute is the multimillion-rand loan that HCI granted to Ithuba in 2015 when it won the contract to operate the national lottery.

In legal papers, HCI wants arbitrators to rule that Ithuba was not entitled to repay a portion of the loan it granted it in 2015 early. HCI further wants arbitrators to rule that it is entitled to exercise oversight over Ithuba.

HCI in 2015 stepped in to provide investment capital to Ithuba to the tune of R325m after Ithuba struggled to get funding from banks due to a legal challenge from erstwhile lottery operator Gidani, which wanted the courts to set aside the government’s decision to award Ithuba the licence to operate the lottery.

The deal between Ithuba and HCI was initially structured into 30 percent preference shares and 70 percent debt.

Source: Business Report – Kabelo Khumalo