Johannesburg - Hotel and gaming group Sun International’s exit from Nigeria would not be rushed and could take a year or two, chief executive Graeme Stephens said yesterday.
Presenting its results for the year to June 30, Sun International described the Nigerian market as difficult and specifically cited low oil prices, Boko Haram and a weakening naira.
Avior Capital Markets analyst, De Wet Schutte, said Sun International’s decision was not a complete surprise as management had indicated that there were problems with the shareholding of their partners and the detention of their employees.
Schutte said Sun International would probably not struggle to find a buyer as the hotel was located in the heart of Victoria Island’s commercial district.
“The land on which the hotel is... (is) a prime spot,” Schutte said. “They will probably not struggle to find a buyer but it is difficult to tell if they can exit without taking a haircut.”
Nigeria’s Economic and Financial Crimes Commission earlier this year detained without charges four employees. Sun International said yesterday that the employees' passports had not been returned.
Stephens said it had become difficult for the company to operate in Nigeria. “We cannot even hold a board meeting without fearing arrest,” he said.
However, he said the company wanted to realise the value of its investments in Nigeria.
“We are not closing the business. It has value. We are not walking away,” Stephens said. He added that the company was soliciting potential buyers.
Earlier this year, Sun International said it had invested about $50 million (R673m) in its Nigerian operations.
Meanwhile, the group’s subsidiary, Emfuleni Resorts, is taking legal action against the Eastern Cape Gambling Board after it granted Electronic Bingo Terminal licences in the catchment area of the Boardwalk.
Stephens said the licences were in breach of the exclusivity that the Boardwalk should have received in return for its bid commitment spend of R1bn at the Boardwalk complex. He described the Electronic Bingo Terminals as “mini casinos”, as they had an average 300 slot machines. Boardwalk had 900 machines. So the three Electronic Bingo Terminal licences had created another Boardwalk.
He said the group was also disappointed that the Eastern Cape Gambling Board had not approved its request for a 20-year extension to the Boardwalk licence. In return, the company had offered to develop the land at the Boardwalk with the addition of a large high-end shopping complex. “The board approved the shopping complex but did not grant the 20-year extension of the casino licence. As a result we will not be proceeding with the mall development at this stage.”
In the year to June 30, Sun International’s revenue rose 15.5 percent to R12.2bn. Headline earnings per share fell 20 percent to 628c a share. It declared a dividend of R1.35 a share, down from R1.75 a share in the corresponding period last year.
Shares inched up 0.82 percent on the JSE yesterday to close at R92.90.
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