Sun Intl. to buy Peermont casino group for $775mn

Mar 20, 2015, 1:30 PM EDT
Parliamentary staff hang South African national flags outside the entrance to the national assembly ahead of the annual state-of-the-nation sppech in Cape Town, South Africa, on Thursday, Feb. 12, 2015.
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On Friday South African hotel chain Sun International announced it will buy casino resort group Peermont for nearly 9.5 billion rand ($775 million). To fund the acquisition, Sun intends to roll over nearly 3.9 billion rand of Peermont's senior debt while taking on a fresh facility of about 575 million rand, it said in a filing to regulators, according to Reuters. In addition, it plans to issue 10.5 million shares of 120 rand each of Sun stock to Peermont shareholders and a rights offer for a further 3.75 billion rand. Sun said it would explore disposal of some small Peermont assets after closing the transaction. Should a deal to sell any before to the transaction's close be reached, then Sun's funding requirement will be reduced, it said. Peermont has 13 properties in Botswana and South Africa, including Johannesburg's Emperors Palace. Sun's medium-term objective is to create a group with fewer, larger, quality assets, it said.
Casino News Daily reports: Graeme Stephens commented on the recent acquisition and said that the deal will be by all means beneficial to Sun International as Peermont is a prominent company that has already consolidated the position of its properties on the market, especially the Emperors Palace. The EBITDA exceeds 37% and the impressive accomplishment is attributed mainly to the experienced management team. In order to become legally valid, the acquisition needs to be reviewed and approved by the regulators and the major shareholders of Sun International who have already been reached for a comment and gave their consent to the acquisition.
Speaking of the benefits Sun International is going to have, the most important one is the chance for increasing the revenue from Gauteng. The latter can take pride in being the most prominent gambling province in South Africa, the one with the highest spend. The Emperors Palace is an attractive gambling hub for every passionate player and the revenue it generates proves of its profitability. As already mentioned, the acquisition of Peermont will affect Sun International business in a positive manner. The range of products and services it offers to South African residents will be diversified and as a result, the company will not be so dependable to the revenue generated by the Grand West Casino.
Mr. Stephens went on to say that the executives of Sun International will stay focused on the opportunities to enrich company’s portfolio and enter markets in Latin America. However, in order to make the Sun International services compatible with all regulatory requirements, company officials have to be prepared to wait at least one year. Anthony Puttergill, the CEO of Peermont Group, shared that the transaction is essential for the further development of the company. During the years, Peermont Group proved itself as a promising company and Mr. Puttergill is convinced that it will be provided with many opportunities for further growth under the protection of a larger company.