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MINORITY SHAREHOLDERS – who own the minuscule free float in gaming investment company Real Africa Holdings (RAH) – will have a while longer to wait to see if either of its larger shareholders will buy them out. Majority shareholder Sun International says it has no immediate plan to buy out minorities and reach a deal with significant minority shareholder Grand Parade Investments (GPI) about delisting the company.
“Not right now. At the moment there’s no particular plan on our part to make an offer to anybody,” said Sun International CE David Coutts-Trotter when asked if a buyout was in the offing. “There’s nothing.”
Sun International owns 64,6% of Real Africa and GPI 30,57%. The little free float remaining is mainly owned by investors who turned down Sun International’s buyout offer about four years ago.
The prize asset in RAH is the 10% of GrandWest casino it owns. It also owns minority stakes in the Sibaya casino in KwaZulu-Natal and in the Carnival City casino in Gauteng. Through its RAH stake, GPI managed to increase its 29,24% stake in GrandWest to the current 33,52% – making it possible for GPI to equity account for its interest. Sun International holds the balance.
GPI has previously made no secret of the fact it would like to increase its GrandWest stake to more than 40%, while Sun International also wants to hold on to its majority position there. That creates a stalemate that can only be resolved by agreement by which the major shareholders could possibly agree to swap assets.
Yielding some GrandWest shares to GPI – in exchange for more of Carnival City – for Sun International wouldn’t only be beneficial to both companies but the RAH minorities would benefit from a buyout at a premium that also saves them listing fees on the JSE.
Although there seems to be no resolution in sight, minorities continue to hope for a buyout, because RAH has been consistently trading at a premium to its last stated NAV of 282c at its interim period in December 2009. At the current market price of 313c/share (admittedly, virtually no trading has been taking place), RAH is priced at around 12% above NAV.
Coutts-Trotter reminds that minorities were offered an opportunity to cash out but turned it down. “The minorities and we can’t agree on a price. So I don’t know when anything will happen,” he says. However, Coutts-Trotter didn’t completely shut the door on a possible deal, saying if someone came up with a workable proposal, Sun International would consider it.