Sun International has sought to acquire 100 per cent of the Peermont Group, following the conclusion of definitive agreements between it and Peermont.
Peermont operates a portfolio of gaming and hospitality businesses, including its flagship Emperors Palace casino resort, three stand-alone hotels and one stand-alone casino.
“The proposed transaction is aligned to Sun International’s strategy to enhance and leverage its existing asset portfolio and to seek new growth opportunities,” [DATA SUI:Sun International] said.
“The acquisition of Emperors Palace provides Sun International with an opportunity to increase gaming revenue from Gauteng, being the provincial jurisdiction with the highest gambling spend in South Africa.”
The hotel and leisure group added that Emperors, one of the largest casinos in South Africa, also boasts an attractive financial and operating profile.
“As a result of the proposed transaction, Sun International’s portfolio of South African assets will be further diversified,” it said.
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According to the group, this diversification has the effect of reducing Sun International’s reliance on its GrandWest property in the Western Cape, which currently represents 27 per cent of the group’s EBITDA.
“The Peermont portfolio of assets also opens the possibility of further restructuring of local assets, with a medium term objective of creating a portfolio of fewer, larger, quality assets,” Sun International said.
“Sun International believes that the proposed transaction and the further restructuring possibilities that may arise from it, will further enhance its position and scale as a leading hotel, resort and gaming operator.”
Sun International will acquire 100 per cent of the issued ordinary shares of Maxshell and the preference shares and mezzanine debt for a purchase consideration determined with reference to an enterprise value of Peermont of 9.4 billion rand.
This is less net debt and certain capital expenditure, working capital benchmark adjustments, if applicable, calculated at the effective date of the proposed transaction.
The group will also assume all the debt currently within the Peermont Group and intends to fund the proposed transaction via the proceeds of an underwritten renounceable rights offer and a new estimated debt facility, to name a few.
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“Sun International intends exploring the possibility of disposing of certain of the smaller assets within the Peermont portfolio following the closing of the proposed transaction,” it added.
“Should an agreement be reached for the disposal of these assets prior to the transaction closing then Sun International’s funding requirements will be reduced accordingly.”