The share price of gaming and hospitality group Peermont Global jumped 4,26% or 30 cents in early trade on Friday after the group revealed it had made it to the next stage in the process of selecting a successful candidate to introduce and operate the first casinos in Singapore.
At 10.30am, Peermont shares were trading on the JSE Securities Exchange at R7,35, up from R7,05 at Thursday’s close, although on small volume of only 4 650 shares.
Peermont Global has a 62% interest in the well-known Caesars Hotel Casino and Convention Resort in Gauteng, as well as stakes in the Graceland Hotel Casino and Country Club in Secunda, the Mondazur Hotel at San Lameer, the Grand Palm Hotel Casino and Convention Resort in Gaborone, Botswana, and two other hotels in Botswana.
The company has qualified to participate in the second phase — request for proposals (RFP) — of the Singapore government’s selection process for its casinos, it said on Friday, after having successfully passed the request-for-concepts phase.
The RFP phase will involve the provision of more detail for the project, as well as proof of financing and other requirements.
Last week, the Singapore government announced it had decided to allow the development of two five-star hotel and casino complexes in the tiny island nation — one located on Sentosa island off the west coast and another on the Marina Bayfront. Both sites have been included in the RFP documentation.
Peermont Global CEO Ernie Joubert said the company has only bid on the Marina Bayfront site because it considers it to be the better of the two. The company estimates the total cost of the project at about $2-billion, of which Peermont plans to invest between 5% and 10% of the equity component of the financing.
However, this is still subject to shareholder and South African Reserve Bank approvals, should Peermont actually emerge as the winner.
“If we are successful, we would hopefully spearhead the process by assembling a consortium with the relevant expertise based in Singapore for the general development of the project, including architects, builders, financiers etc,” Joubert added. “We would also be the operators of the hotel and casino.
“Of course, if we did win, it would resulting a major restructuring in the way in which we manage our business — we would have to determine how to look after our South African assets since this is by far the largest project we have faced.”
Peermont’s success in the bid would be a major coup for the group, as it is faced with stiff competition from 12 other bidders that submitted 18 proposals across the two sites. Besides the major global casino operators such as MGM Grand and Harrah’s, South Africa’s Sun International has also made it to the RFP stage.
Also fighting for the honours in Singapore will be Kerzner International, Macau gaming tycoon Stanley Ho in a consortium with Kerry Packer, Australia’s Tabcorp, Venetian Sands and Malaysia’s Genting Highlands group, among others.
Despite the high-level competition, Joubert is upbeat on his company’s prospects, given that the Singapore government has indicated it wants the winners to make the Singapore casino their flagship property in the Far East — this would rule out some participants.
Joubert says he expects the submission deadline for RFP proposals to be the end of the third quarter or early in the fourth quarter of this year, and the Singapore government to announce the final winner or winners in December.
However, the casino licences will only be officially awarded once other provisions are met, including the provision of financial guarantees. — I-Net Bridge