Sun International’s desire to own 100% of SunWest International and Sun Slots has become more complicated since GMB Liquidity Corporation became the majority shareholder of Grand Parade Investments (GPI). SunWest is 15% owned by GPI, and Sun Slots is 30% owned by GPI. Sun International CEO Anthony Leeming stated that Sun International owned the majority of SunWest and 70% of Sun Slots, and that the company’s long-term goal was to own these assets entirely. Sun International’s acquisition of 22.6% of GPI’s issued share capital provides a strategic position and ensures that the company is involved if a deal is struck or discussions about their disposal begin. However, Leeming admitted that it will be “definitely a little more complex in the long term” for Sun International to own 100% of these two assets. GPI’s shareholders became dissatisfied with the company’s performance and demanded changes, prompting Mohsin Tajbhai to step down as CEO on May 4.
SunWest International owns 100% of the GrandWest casino and entertainment destination in Cape Town, as well as the Table Bay Hotel at the V&A Waterfront, and Sun Slots is a leading limited pay out machine operator. GPI’s portfolio assets include a 15.1% shareholding in Golden Valley Casino and Hotel, located in the Breede River Valley in the Western Cape; a 26% shareholding in Infiniti Gaming Africa, a supplier of integrated, scalable casino management and jackpot system solutions; an A-grade office block on Heerengracht Street in Cape Town’s city centre; and a B-grade industrial/warehouse building with off-site parking.
GMB’s offer to GPI shareholders became effective in November 2022, after GMB increased its stake in GPI to nearly 49%. GPI announced last week that GMB now holds 53.65% of the total GPI shares in issue, following shareholders’ ownership of 21.1 million of the company’s shares, representing 4.49% of the total GPI shares in issue, accepting GMB’s mandatory offer to shareholders. Greg Bortz, a gaming sector enthusiast and GMB’s sole shareholder, was announced as the new CEO of GPI, and GMB has stated that there are no current plans to delist GPI from the JSE.
Leeming stated that there have been no official engagements with GMB as of yet. These things will unfold as they should, so we must participate and see where it leads and what Bortz’s long-term goals are. We believe he is involved in horse racing, and there is agreement on the other business. We are not concerned with our current situation, but it is too early to predict how it will play out and how long it will take. Sun International sees no reason to rush into a transaction involving SunWest and Sun Slots and would never do anything stupid.
GPI has returned 100 cents in cash dividends and 37 cents in dividends in kind over the last 18 months through the unbundling of Spur shares. In the five years since Mohsin’s arrival at GPI, the group’s debt has been reduced by more than R450 million, head office costs have been reduced by more than 40%, dividend payments have resumed, and the share price discount to net asset value (NAV) has been reduced from a 30% discount to a 27% premium. GPI shareholders who accepted GMB’s offer received R3.33 per share, representing a 27% premium to NAV.
Sun International reported a 44% increase in revenue to R11.3 billion in the fiscal year ending December 31, 2022, last month.
