Johannesburg - Sun International [JSE:SUI]
and Grand Parade Investments [JSE:GPL]
have concluded a deal, which would see Sun International purchase from GPI a portion of shares in SunWest and Golden Valley casino in Worcester.
If the transaction was approved, Sun International would also acquire all GPI's shares in Real Africa Holdings [JSE:RAH] through an offer to all Real Africa Holdings shareholders, which would create a single listed point of entry into the Sun International Group.
Sun International CE David Coutts-Trotter said this deal had been a significant time in the making, but that it had been concluded to the substantial benefit of both parties.
"GPI will marginally reduce its economic interests in SunWest and Worcester while still maintaining significant influence over these operations with Sun International continuing to provide management services on a long term basis.
"Sun International has made a substantive contribution to black economic empowerment and it is very rewarding to see GPI now realising some of that value. Into the future, GPI will be able to capitalise on the significant empowerment that Sun International and GPI have jointly achieved."
GPI Chairman Hassen Adams said: "we are delighted that this future-changing deal will allow us to be truly masters of our own destiny. It is a major milestone in the life of GPI. This deal means that we retain a stable forward-looking dividend rich investment base in SunWest, yet at the same time, the cash injection allows us to pursue new empowerment investments in other industries and provides a sustainable business platform.
He added that the new war-chest would give the company "fantastic options" to pursue new investments in other industries and alternative investments in the gambling industry which were currently under-penetrated by black South Africans.
GPI was currently a significant player in the slot route industry.
"Importantly, we are firmly of the view that our future lies in technology-based gaming and yet this deal allows us to retain a sizeable share in the most successful casino in the southern hemisphere."
In terms of the deal, Sun International would acquire from GPI a 4.9% economic interest and a 0.1% voting interest in SunWest International, taking GPI's shareholding to 25.1% of the economic rights and 49.9% of the voting rights of SunWest.
Sun International would also acquire 21.1% of GPI's direct shareholding in Golden Valley Casino in Worcester, after which GPI would hold 25.1%.
Following the implementation of these two transactions, Sun International would launch an offer to Real Africa Holdings shareholders resulting in the purchase of GPI's entire 30.6% shareholding in Real Africa Holdings.
The GrandWest and Golden Valley management agreements, which currently expired on 31 December 2015 and 30 April 2016 respectively, would be cancelled with effect from 1 July 2011 in exchange for cancellation fees.
Sun International would continue to manage GrandWest, The Table Bay Hotel and Golden Valley through new long term management and royalty agreements.
In addition, on completion of the transaction, GPI would be released from all empowerment lock-in obligations. This would ultimately result in the unbundling of the GPI SPV Trust and BEE Trust, following which unit holders would receive GPI shares which they could trade freely.
The deal was subject to a number of conditions precedent, including GPI and SIL shareholders approval and regulatory approval from the JSE, the Securities Regulation Panel, the Competition Authorities and approval from the relevant Gambling Boards.