Nueva IPS offer to buy 50.1% stake in Sun
The Nueva offer included a proposal to provide Sun International with interim liquidity support in the form of a bridge loan, which would strengthen the balance sheet and address liquidity concerns.
The group said the transaction would also help in underwriting at least 50.1percent of a R1.2billion rights issue, following completion of the partial offer.
IPS chairperson Claudio Fischer said in a statement: “Our proposed offer builds on the relationship that we have had with Sun International since 2016 and our aligned values. Like Sun International, we have a vision of providing world-class entertainment through prime infrastructure and excellence in service, coupled with a strong commitment to responsible and sustainable gaming.
The offer comes just hours after the hotel and gaming group yesterday announced a R1.2bn rights issue scheduled for August.
Sun International said the rights issue would be accompanied by a restructuring of operations and debt covenants to tide it through a slow recovery from the Covid-19 lockdowns in South Africa and South America.
It said the proceeds of the rights issue would be used to strengthen the balance sheet and put the group in a better position post the Covid-19 crisis. Full-year financial results in March showed the debt burden at R8.8bn.
Sun International operations in South America and South Africa closed in March as a result of the Covid-19 lockdown regulations.
This month, the government announced that casinos, restaurants, hotels and resorts would be allowed to reopen.
While restrictions on inter-provincial travel would impact the opening of certain properties, such as Sun City and the Wild Coast Sun, the group’s properties were in a state of readiness to reopen at short notice.
Chief executive Anthony Leeming said: “Once the government has announced the dates we will stagger the reopening of our properties across the country.
“Our leisure attractions, golf courses and swimming pools will also reopen, subject to the necessary regulatory guidance,” he said.
Hotel and resort properties were expected to be under pressure for some time, however, and a “significant restructure of our hotel and resort properties” was planned, as was a limited restructure of gaming operations.
The Sun Carousel and Naledi casinos would remain closed.
In terms of the debt concessions, capital payments for June 30, 2020 to March 2021 were deferred, and would resume on June 30, 2021. The waived amounts would be amortised over the remaining period.
Interest and dividend service would recommence on December 31, 2020, if Sun International resumed operations by November 15.
Current contractual covenants were waived until June 30, 2021, and new covenant levels would be agreed by March 31, 2021.
Failure to resume at least 50 percent of operations by January 1, 2021, would trigger the right for lenders to declare an event of default.
Other measures planned to improve liquidity over the medium term included the sale of land surplus to requirements - Carnival (R70m); Carousel (R200m); Sibaya (R45m); and Time Square (R64m).
Sun International shares closed 22.13percent higher at R18.10 on the JSE yesterday.