Tsogo Sun announced this Monday at a reconvened general meeting that previously announced plans for selling several casino properties will have to be scrapped upon further consideration. It has also decided not to As it has been confirmed, the hospitality and gaming entity has decided to continue overseeing management of the seven mixed-use venues, as support of the project turned out being insufficient.
The casino developer and operator has been pondering the possibility of selling the aforementioned properties ever since July and the pros and cons have been evaluated. Back then the casino group announced it is going to provide the Hospitality Property Fund with seven of its hotel-casino complexes through a sale. The said disposal was set to conclude shares and subscription in its arrangement and according to the issue information it reached R23 billion (approximately US$1.71 billion).
Path of Development Changes
This plan for action aligned well into the previous line of development for Tsogo Sun, which aimed to introduce three segments of operation in the foreseeable future. Those were a property division, a gaming division focusing on casino offerings, as well as a hotel management division providing accommodation variety.
This was projected to provide better understanding of the individual segments of operation and ensuring each of them receives the needed attention. The month of October saw a special General Meeting scheduled which had the main objective to issue an ultimate decision regarding the sale. However, upon further consideration the Chairman of Tsogo Sun ultimately decided to postpone it to 12th November giving more time for evaluation.
The thing that concerned Tsogo Sun’s management the most was that support of the sale remained low among shareholders. The Board of Directors decided it would be best if the arrangement never sees the light of day. All parties involved in the agreement, including the gaming group Tsogo Sun, Hospitality Property Fund, and other entities agreed to this move.
Previous Plans Scrapped for Good
Following the inking of this agreement, Tsogo Sun was going to acquire some 87 percent of Hospitality Property Fund, making it a significant shareholder in theory. However, its further plans for this chunk of the company included providing investors with access to those shares via an unbundling.
Shortly after the crucial announcement completely altering the path of development was made, the gaming group’s shares witnessed a plunge of almost 4 percent. This ranked them at R20.47 for a single share. Ever since November last year it has been known that the casino operator is eyeing the possibilities available in the region of Cape Town which are vast. Back then it was publicly announced that Tsogo Sun is striving to relocate some of its operation to the second-most populous area in the region.
Such rezoning was supposed to happen only under the condition that it proves beneficial for the future operation. With the help of its division Southern Sun Hotels, Tsogo was set to reach a rezoning permission. This Monday brought no new proposed paths of development, but upcoming weeks could easily change that, as the casino developer and operator seeks ways in which it could fill in its gaping debt hole.