/ 23 March 2005

Sun International to dispose of City Lodge stake

Listed hotels and gaming group Sun International plans to dispose of its 38,6% stake in fellow hotel group City Lodge Holdings for R627-million, equating to R38,50 per share, the company announced on Wednesday.

In terms of the proposed sale, Sun International said it plans to dispose of the City Lodge shares to shareholders of Sun International in exchange for the acquisition by a Sun International subsidiary (Newco) of Sun International shares, on a pro-rata basis, from all the Sun International shareholders, equivalent in value to the disposed City Lodge shares.

Enderle South Africa, another major City Lodge shareholder with a 12% stake in the company, has pre-emptive rights over Sun International’s stake, the company explained. To the extent that Enderle exercises its pre-emptive rights over the shares at the price of R38,50 per share, the cash proceeds from the sale will be used by Sun International to complete part or all of the proposed share buyback.

The majority of the Sun International shares bought back (approximately 5% of the shares then in issue) will be used to introduce a black economic empowerment (BEE) consortium into the company, the group added.

The final switch ratio of City Lodge shares to Sun International shares in terms of the share buyback will be determined with reference to the R38,50 fixed price and the market price of Sun International shares at the date of the actual sale of the City Lodge shares, Sun International explained.

The total of either City Lodge shares and/or cash to be received by Sun International shareholders will depend on the number of City Lodge shares taken up by Enderle or the number of City Lodge shares sold in terms of a third-party disposal.

Once the transaction is completed, BEE individuals and groupings will hold more than 25% interest in Sun International and its subsidiaries. — I-Net Bridge