Sun International Increases Stake in Latam Subsidiary Sun Dreams to 64.9%
South Africa?s Sun International is raising its stake in Chilean casino group Sun Dreams to 65 per cent from 55 per cent in a deal valued at about R2bn (?1.35bn approx.) The JSE-listed hotels and casino group said one of its three partners in Sun Dreams? Entretenimientos Del Sur Limitada (EDS)? had opted to sell its 20 per cent holding. EDS said in March it wanted to do this by selling its shares via an initial public offering.
RATHER THAN proceeding with the IPO? Sun International and the third partner? Pacifico? agreed to buy out EDS for $126m. Pacifico will raise its stake in Sun Dreams to 35 per cent from 25 per cent as a result of the deal. The company?s statement said Pacifico could exit its investment in due course via a Sun Dreams IPO? but Sun International had an option to buy out Pacifico if it did not find the IPO attractive. The company said that the proposed acquisition, aside from increasing Sun International?s shareholding in Sun Dreams to approximately 65 per cent? which is aligned with its strategic objective of increasing its interests in Latin America? also eliminates the risks of having both EDS and Pacifico exercising their put options against Sun International for their entire shareholdings in Sun Dreams. The purchase price of just over $63 million will be settled in cash, with funding to be procured from financial institutions in Chile. Sun International CE Anthony Leeming commented that the proposed acquisition is aligned with the group?s stated intention of growing its gaming and hospitality business offshore and in particular in Latin America. Leeming remarked, ?The acquisition also strengthens the partnership between Pacifico and Sun International in Sun Dreams, which positions us extremely well for the future? Claudio Fisher, CE of Pacifico, said: ?We have established a great partnership with Sun International and with our common interest in growing the business we look forward to a long and successful partnership? Roberto Chute, MD of TRG, said: ?We would like to thank our partners, Sun International and Pacifico, for the opportunity to create the leading gaming and hospitality platform in Latin America. We are confident that our partners, together with a highly experienced management team will continue delivering on this path of growth.? Sun Dreams is the largest gaming player in Latam and has the profile, critical mass and balance sheet to expand into the rest of the continent, make meaningful acquisitions, and take on larger projects. Sun Dreams has a sizeable portfolio of assets situated across 4 countries, with 13 properties which between them have 6,500 slot machines, 300 table games, 6 hotels and 25 restaurants. Said Leeming: ?In line with our stated intentions, we will continue to explore all viable opportunities for expansion in the region. These include Peru as well as Brazil where licensed casinos may be introduced. The Chilean economy, although still experiencing low GDP growth, is showing signs of improvement with low inflation and interest rates. Although trading in the early part of 2017 was subdued, it is expected to pick up towards the end of the year.? Sun Dreams is planning on bidding to renew its two municipal licences in Chile, as well as bid for additional municipal licences in the territory.
Macau Legend to Build Casino off African West Coast
MACAU LEGEND, led by billionaire and former Macau legislator David Chow, is building a $275 million casino complex in Cape Verde, a set of islands off Africa?s west coast. The 152,700 square-meter (1.6 million square feet) complex, which will house a resort, casino, office buildings, and a museum in Cape Verde?s capital city of Praia, is now in its first phase of construction. So far, a seawall has been built and construction of the hotel is expected to start soon, according to a Macau Legend spokesperson. The massive complex will be partially built on reclaimed land, area that was once under the sea. It should take at least another two years. But the casino isn?t meant for Cape Verde?s half a million residents, many of whom depend on foreign aid flows, remittances, and tourism for their livelihoods. Instead, Macau Legend hopes to cater to tourists from Europe, elsewhere in Africa, and most importantly from China, the biggest source of customers for Macau?s casinos. For the past four years, China has been the world?s largest outbound market. Chinese tourists spent $261 billion last year, a 12% increase from the year before, according to the UN World Tourism Organization (UNWTO). Spending from this market has seen double-digit growth every year since 2004 and is expected to continue expanding, according to the UNWTO. As China builds its ?One belt, One road? or ?Maritime silk road,? a network of land and sea transport links that roughly follow the ancient Silk Road route, more African countries will attract Chinese investors and tourists. Casino companies in Macau, where gambling revenues have fallen during an anticorruption campaign in China, are looking to capitalize on this. ?This project follows the China government?s national policy ?One belt, one road?, a strategy to help position Macau as one of the important cities on the Maritime Silk Road, which shall be a vanguard to lead Macau small and medium enterprises to expand from Macau,? Chow, Macau Legend CEO, said in a 2015 press release announcing the project. Chow said that Macau and Cape Verde, both former Portuguese colonies, share a common heritage. 04 I Gaming For Africa I June / July 2017