Sun International cries foul over IPS plan


Sun International cries foul over IPS plan

Published Date: 2020-06-29 | Source: Stephen Gunnion | Author: Stephen Gunnion

Sun International cries foul over IPS plan

The company wants to replace a R1.5 billion deal for 15 percent of Sun's Latin American business with a bid for 50 percent of the entire group.

Sun International says it wants Latin American suitor Nueva Inversions Pacifico Sur (IPS) to settle a deal to purchase a 15% stake in its Sun Dreams subsidiary. And it's headed for the International Chamber of Commerce next year if it doesn't.

In a notice to shareholders, Sun International also accused IPS of misrepresenting the facts and breaking a confidentiality agreement in a letter sent to shareholders last week.

The developments followed a proposed R1.2 billion rights issue by the hotel and casino operator, announced last Wednesday, to help support its operations due to the impact of Covid-19 and lockdowns that have affected its local and Latin American operations. Hours after it notified shareholders of the capital raise on the JSE's SENS news service, IPS sent its letter, informing investors of its proposal to buy 50.1% of the local group at R22 per share. The proposed partial offer works out at about R1.5 billion, almost the same as it would have paid for the 15% stake in Sun Latam, the holding company for Sun Dreams.

The $85.8 million (R1.49 billion) transaction, struck in April last year, was part of a broader transaction that would have led to a listing on the Santiago Stock Exchange after raising IPS's stake in Sun Dreams to 50%. Sun International's interest would have reduced from 64.94% to 50% and the proceeds would have been used to reduce debt. After Chile's gaming authorities approving the deal last November, IPS sent a letter to Sun Latam purporting to end the deal and failed to close the transaction.

IPS said its proposed offer was contingent on getting the irrevocable undertakings of Sun International's biggest shareholders. However, its second-largest shareholder, Value Capital Partners, has already dismissed it as too low.

Sun International's shares fell 2.1% to R17.70 on Friday. They rallied 22% on Wednesday when news of IPS's potential bid broke.

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