Tsogo Sun slows hotel and casino spending as debt pile grows | Fin24
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Tsogo Sun slows hotel and casino spending as debt pile grows

May 27 2018 14:12
Odwa Mjo, Bloomberg

Tsogo Sun [JSE:TSH] is slowing investments in expanding existing businesses and making new acquisitions after debt ballooned.

"We continue to look at other opportunities, but obviously we’re mindful of the fact that our debt levels are higher than they used to be," chief executive officer Jacques Booysen said by phone.

"We are not just out there to buy anything that comes up for sale."

While the company will be paying more attention to its costs, Tsogo will still expand further into Africa, with plans to open a Garden Court in Zambia, and a Southern Sun Hotel in Ghana by 2019, the CEO said. It also plans to spend R1.6bn to refurbish Suncoast in Durban, Booysen said, of which R291m was spent in the year through March.

"We’ve got opportunities in the Western Cape, with the possible relocation of the smaller casinos into the metropole," he said.

"Also, in Cape Town, Tsogo has opened StayEasy budget hotels in the city, and Maputo."

The Johannesburg-based company’s investment spending in the fiscal year through March declined almost 8% to R3.25bn, Tsogo said in an earnings presentation on Wednesday.

Those investments included the purchase of Gameco in exchange for shares and R1.7bn in cash. Since November, Gameco has brought in cash of R624m, the CEO said.

The company’s net debt increased 4% to R12.5bn, Tsogo said. That compares with R3.58bn at the end of 2013, according to data compiled by Bloomberg.

The stock fell 0.3% as of 09:26 in Johannesburg, giving Tsogo a market value of R26bn. 

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