Casino and gaming equipment group Admiral Leisure looks set to be the latest company to delist from the JSE Securities Exchange (JSE).
Austrian Gaming Industries GmbH (AGI) — a company incorporated in Austria — is proposing a scheme of arrangement to acquire all of the shares held by shareholders, other than those held by AGI and senior management, for 32 cents per Admiral share.
AGI became the controlling shareholder in Admiral in 2002 and at that time, an offer was made to minority shareholders to acquire their shares at 32 cents per share. Some investors may have elected to retain their shares, anticipating a revival in Admiral following AGI’s investment.
As a result of these expectations, despite the subsequent poor performance of the company, AGI has elected to establish the scheme consideration at 32 cents, the company said on Monday.
The scheme is being proposed as an exit mechanism for shareholders pursuant to the proposed delisting of the company from the JSE.
Admiral has been active in the local market since 1994 and currently has operations in Botswana, Namibia and Swaziland. However, the size and potential of these operations do not justify Admiral continuing as a listed company, it said.
Admiral has also not been able to penetrate the casino sales market due to the fact that it has also applied for casino licenses and the other casino operators have always viewed Admiral as a potential competitor, it added.
The operations and future sales into the casino market will not be sufficient to recover the debt and losses that have been incurred by Admiral. There is potential for the company to be turned into a moderately profitable small business, but this will require further investment and a recapitalisation of the company.
The company has a very small market capitalisation and no benefits are anticipated to arise by maintaining its JSE listing. Consequently, the directors of Admiral are of the opinion that the continued listing of the company and the associated costs thereof are no longer justifiable.
The scheme will be subject to approval by a majority representing not less than 75% of shareholders, court sanction, and the approval of the various regulatory authorities.
An independent adviser has been appointed to advise the board on whether it considers the terms and conditions of the scheme to be fair and reasonable for shareholders.
A circular containing full details of the scheme and the proposed delisting will be posted to Admiral shareholders within 28 days and further announcements including the salient dates pertaining to the scheme and the proposed delisting will be published in due course. — I-Net Bridge