The gaming, hotel and entertainment group will acquire a further 10 per cent equity interest in Cullinan while Liberty Group's shareholding will be reduced from 50 per cent to 40 per cent.
“The transaction affords Tsogo the opportunity to own hotel properties which are currently managed or leased, providing increased exposure to quality hotel properties. The investment by Tsogo of a net 762 million rand pursuant to the transaction is consistent with Tsogo’s growth strategy of allocating capital to attractive opportunities,” [DATA TSH:Tsogo Sun Holdings Limited] said.
(READ MORE: Tsogo Sun reports positive growth path)
“Southern Sun will acquire a further equity interest in Cullinan by subscribing for an additional 1,000 ordinary shares in Cullinan for a subscription price of 100 million rand. This will result in Southern Sun’s shareholding in Cullinan increasing from 50 per cent to 60 per cent.”
Financial services group, [DATA LBH:Liberty Holdings Limited] indicated that as part of the transaction, it would sell a portion of its hotel portfolio consisting of the Garden Court Eastgate hotel, the Garden Court Hatfield hotel and the Garden Court Kings Beach hotel property, among others, to Cullinan.
“The transaction supports Liberty’s strategy of becoming the leading wealth management company on the African continent. There are numerous initiatives that are currently being considered as part of the STANLIB Direct Property investment strategy,” Liberty said.
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“These include the upgrade, restructuring, acquisition and disposal of assets that management believe will in time benefit investors.”
The deal will also see Southern Sun grant Liberty Group a ‘put option’ and Liberty Group grant Southern Sun a ‘call option’.
“In terms of the call option, Southern Sun will have the option to acquire Liberty Group’s entire 40 per cent equity interest in and shareholder claims against Cullinan at fair value,” it said.
“In terms of the put option, Liberty Group will have an option to dispose of the option interest to Southern Sun at fair value, but subject to a cap of one rand less than 20 per cent of Tsogo’s market capitalisation at the put option exercise date.”