South Africa – Tsogo buys stakes in GrandWest and Golden Valley CasinoBy Phil - 11 June 2014
South African operator Tsogo Holdings has bought 40 per cent equity interest in hotel and casino operator SunWest International and another 40 per cent in Worcester Casino for R2.1bn.
SunWest operates the GrandWest Casino, the Table Bay Hotel in Cape Town and holds a minority equity interest in the Cape Town International Convention Centre.
GrandWest is the only casino in the Cape Town Metropole. GrandWest operates 2,524 slot machines, 75 tables and 39 hotel rooms. GrandWest produced revenue of R1.866bn for the financial year ended June 2013.
Worcester operates the Golden Valley casino, hotel and entertainment centre at Breede River Valley in
Worcester. Golden Valley operates 220 slot machines, 6 tables and 98 hotel rooms. Golden Valley produced revenue of R128m for the year ended June 2013.
The group stated: “Tsogo has limited exposure to the markets in which SunWest and Golden Valley operate and wishes to enhance its presence in these markets. Both Sun International and GPI believe that Tsogo provides similar BEE ownership credentials to that of GPI as well as having the financial capability to implement a transaction of this magnitude.”
“Tsogo will have representation on the board of directors of SunWest and Worcester however, it will have no operational responsibility as all operations will continue to be managed by Sun International under its existing management contracts,” it added. “Tsogo will acquire a 14.9 per cent equity interest in SunWest and a 14.9 per cent equity interest in Worcester from Sun International, a wholly-owned subsidiary of Sun International, and Afrisun Leisure Proprietary Limited, a subsidiary of Sun International, respectively, for an aggregate consideration of R635m. Tsogo will subscribe for new shares in SunWest and Worcester for an aggregate subscription price of R1,550 million and each of SunWest and Worcester will undertake a specific share repurchase for the entire equity interest held by GPI and its subsidiaries in SunWest and Worcester for an aggregate cash consideration of R1,550m.”
Sun International Chief Executive Graeme Stephens said: “A key strategic focus area for Sun International is growing its operations into new regions and diversifying the product offering. The proposed transaction with GPI Slots provides Sun International with a meaningful entry into the LPM market with potential to expand not only within South Africa but also into other jurisdictions.”
Sun International has also acquired an additional 5.6 per cent of the Sibaya Casino in KwaZulu-Natal from GPT taking its total ownership to 67.2 per cent
Mr. Stephens explained: “The transactions are consistent with Sun International’s long-term objectives of increasing its interest in key strategic assets, expanding into different product offerings and geographic regions, streamlining the corporate structure and enabling BEE value creation.”
The Sibaya Casino is positioned between Umdloti and Umhlanga on the north coast of KwaZulu-Natal. Sibaya Casino operates 1,212 slot machines, 48 tables and 154 hotel rooms.