Sun International in deal with Thai group

By Marc Hasenfuss

Sun International (SUI) on Monday teamed up with Thailand-listed leisure conglomerate Minor International (MINT) in a R661m deal that allows the South African gaming giant to markedly reduce its exposure to African hotel operations.

The mechanics of the deal sees MINT acquiring majority holdings in the Gaborone Sun in Botswana‚ the Kalahari Sands in Namibia‚ the Lesotho Sun and Maseru Sun as well as the Royal Swazi and Ezulwini Sun in Swaziland.

Sun will reduce its 100% stake in the Royal Livingstone and Zambezi Sun in Zambia to 50%‚ with MINT holding the balance.

A key retention for Sun is its responsibility for running the various casino operations attached to certain African hotels. Market sources reckoned this was a smart move‚ allowing Sun to reduce its maintenance and upgrading expenditure while still retaining the cash flows from managing several casino operations.

At face value‚ Sun’s divestment move seems to fly in the face of current investment fashion — especially since rival gaming group Tsogo Sun and hotel group City Lodge are extending their presence in Africa.

But Sun — which is also in negotiations with MINT over its Federal Palace casino operation in Nigeria — has shown some reluctance to bulk up its African exposure. Sun has‚ in recent years‚ preferred to focus on Latin American markets‚ where it already operates a casino in Chile and is in the process of setting up operations in Panama and Colombia.

Sun indicated on Monday that the arrangement with MINT could create a strategic alliance to explore other hotel and gaming opportunities in Africa and Asia. This would entail MINT managing the hotel component and Sun handling the casino component.

Blue Alpha Investment Management director Uys Meyer said the African sell-off was a reasonable move by Sun. “Historically these African assets have never been earnings-enhancing.”

Sun’s results for the six months to end-December showed Zambian hotel occupancies at 45%‚ the Gaborone Sun at 76% and Kalahari Sands at 70%.

On the other hand‚ African gaming revenue increased by 48% for the interim period.

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