GAMBLING: Reshuffle At Grand Parade
Recent Western Cape Business News
Sun International and Grand Parade Investments said yesterday that they had concluded a ‘significant’ deal, which would see Sun International purchase from GPI a portion of shares in SunWest and Golden Valley. The future direction and partnership was further cemented through Sun International entering into new long term management and royalty agreements with both SunWest and Worcester.
If the transaction is approved, Sun International will also acquire all GPI’s shares in Real Africa Holdings through an offer to all Real Africa Holdings shareholders, which would create a single listed point of entry into the Sun International Group.
Sun International CE David Coutts-Trotter said this deal had been a significant time in the making, but that it had been concluded to the substantial benefit of both parties. “GPI will marginally reduce its economic interests in SunWest and Worcester while still maintaining significant influence over these operations with Sun International continuing to provide management services on a long term basis.
“Sun International has made a substantive contribution to black economic empowerment and it is very rewarding to see GPI now realising some of that value. Into the future, GPI will be able to capitalise on the significant empowerment that Sun International and GPI have jointly achieved.”
GPI Chairman Hassen Adams said: “we are delighted that this future-changing deal will allow us to be truly masters of our own destiny. It is a major milestone in the life of GPI. This deal means that we retain a stable forward-looking dividend rich investment base in SunWest, yet at the same time, the cash injection allows us to pursue new empowerment investments in other industries and provides a sustainable business platform.
“This new war-chest will give us fantastic options to pursue new investments in other industries and alternative investments in the gambling industry (GPI is currently a significant player in the slot route industry) which are currently under-penetrated by black South Africans. Importantly, we are firmly of the view that our future lies in technology-based gaming and yet this deal allows us to retain a sizeable share in the most successful casino in the southern hemisphere.”
In terms of the deal, Sun International will acquire from GPI a 4.9% economic interest and a 0.1% voting interest in SunWest International, taking GPI’s shareholding to 25.1% of the economic rights and 49.9% of the voting rights of SunWest. Sun International will also acquire 21.1% of GPI’s direct shareholding in Golden Valley Casino in Worcester, after which GPI will hold 25.1%. Following the implementation of these two transactions, Sun International will launch an offer to Real Africa Holdings shareholders resulting in the purchase of GPI’s entire 30.6% shareholding in Real Africa Holdings.
The GrandWest and Golden Valley management agreements, which currently expire on 31 December 2015 and 30 April 2016 respectively, will be cancelled with effect from 1 July 2011 in exchange for cancellation fees. Sun International will continue to manage GrandWest, The Table Bay Hotel and Golden Valley through new long term management and royalty agreements.
In addition, on completion of the transaction, GPI will be released from all empowerment lock-in obligations. This will ultimately result in the unbundling of the GPI SPV Trust and BEE Trust, following which unit holders will receive GPI shares which they can trade freely.
KEY FEATURES OF TRANSACTION INCLUDE:
· Following implementation of the transaction, Sun International’s effective shareholding in SunWest will be 69.84%, its share in Worcester will be 66.7% and if an offer is successful, its share in RAH, 100%.
· New beneficial long-term operating agreement with Sun International to manage GrandWest, Table Bay and Golden Valley
· GPI will receive R 778 million in cash and retain 25.1% in SunWest and 25.1% in Worcester Casino
· GPI will retain capital for investment into new areas where advantage can be taken from GPI’s BEE status and income streams can be diversified
The deal is subject to a number of conditions precedent, including GPI and SIL shareholders approval and regulatory approval from the JSE, the Securities Regulation Panel, the Competition Authorities and approval from the relevant Gambling Boards.
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