Sun International Investor Rejects Bid From Chilean Casino Owner
Sun International Investor Rejects Bid From Chilean Casino Owner
Sun International Ltd. received an offer of about 1.5 billion rand ($86 million) that would see control handed to Chilean partner Nueva Inversiones Pacifico Sur, only for the approach to be swiftly opposed by the South African casino and hotel operator’s second-largest shareholder.
Closely held Nueva is willing to pay 22 rand a share for a 50.1% stake in Johannesburg-based Sun, according to a statement on Wednesday. Sun’s shares shot up 22% in the last few minutes of the trading day after the announcement, before paring gains early on Thursday.
Value Capital Partners, which has a 20% stake in Sun, said it opposes the proposal as significantly undervaluing the company. The Johannesburg-based investment firm “does not believe a sale at artificially depressed prices is in the interest of existing shareholders,” it said in an emailed statement.
Sun, the owner of the Sun City resort northwest of Pretoria, was forced to close its properties in late March as part of lockdown measures to contain the coronavirus. While President Cyril Ramaphosa said last week that casinos will soon be allowed to reopen, the conditions haven’t yet been set and Sun has said they may include restrictions on the number of slot machines and alcohol sales.
An ongoing ban on interprovincial travel will also hamper any speedy recovery in demand, Sun said in a presentation to investors. Employees will be paid only part of their salaries until trading returns to normal levels even after the casinos and hotels reopen.
Ongoing Litigation
Nueva’s proposal doesn’t represent a formal offer and is one of several unsolicited moves made by the Chilean company that have come with several conditions, Sun said in a statement Thursday. The unresolved issues include a legal dispute between Sun and Nueva in Chile, where the two firms have been partners since 2016.
Nueva said it would underwrite at least half of a 1.2 billion rand rights issue if the move is successful, and will provide a bridge loan to ensure liquidity during the ongoing crisis. The comany is being advised by Goldman Sachs Group Inc. and is owned by brothers Claudio and Humberto Fischer.
Sun’s shares traded 2.3% lower at 17.68 rand as of 9:16 a.m. in Johannesburg, valuing the company at 2.4 billion rand.
©2020 Bloomberg L.P.