Sun International has shaken the stock market with its recent BEE (Black Economic Empowerment) deal with North West groups, acquiring their three casino licenses in the area.
Shareholders are to approve the transaction by the end of this month coinciding with their annual general meeting. The deal raises the shareholding of Sun International to 25 percent and will put another 7 percent of share capital in the peoples hands. David Coutts-Trotter will occupy the place of Peter Bacon as Head of the Company by summer of next year.
According to Duncan Artus, Allan Gray analyst, the BEE deal is beneficial for shareholders despite its cost, because it allows them to operate in the North West. At the same time, casino revenues have increased a 19 percent, while rooms revenues did it an 8 percent. The share price of Sun International closed 0,6 percent higher after the deal was made public.
A couple of years ago, Sun International bought 18 percent of the North West Development Corporation in South Africa, which was its subsidiary. Sun City, Morula Sun, and the Carousel are operated by the company. Sun International met the conditions for the three casino licenses of the North West groups led by Popo Molefe and Valli Moosa, and consummated the BEE deal. The seven BEE groups that are going to enter are a part of the deal known as Dinokana. 51 percent of Dinokana is going to be hold by the North West consortium, which is formed by 5 BEE groups. Half of the consortium is held by Lereko, which is a group of investment holdings led by Molefe and Moosa. Lereko will have a shareholding of 28,05 percent of Dinokana, which means a 1,96 interest in Sun International. Lulu Gwagwa, from Lereko, will be Dinokanas representative in the Sun International Board. The Sun International Employee Share Trust holds a 43 percent Dinokana. Dinokana will buy 65 percent of its stake, while the remaining 34 percent will be paid by Sun International shareholders.
