/ 26 July 2005

Sun International to sell City Lodge stake, buy shares

Listed hotel and gaming group Sun International will proceed with the sale of its entire 38,6% stake in City Lodge Hotels to Sun International shareholders for a total of R627-million, in exchange for repurchasing its own shares from them, the company said on Tuesday.

The move follows the decision by Enderle SA, another major shareholder in City Lodge with a 12,6% stake, not to exercise its pre-emptive right over the shares.

Sun International offered to sell its shareholding in City Lodge on March 23 at a price of R38,50 per share, the price it has now offered its own shareholders. This represents the ruling share price on the JSE Securities Exchange (JSE) on March 22, plus a premium of 4,3%.

Enderle had 120 days in which to exercise its pre-emptive option, which ended on Thursday July 21.

Sun International will use the proceeds of R627-million to buy back approximately 5% of its own shares from shareholders on a pro-rata basis. The shares will then be used to introduce a black economic empowerment (BEE) consortium as a shareholder in the company.

This new 5% BEE shareholding will lift the overall value of ownership by previously disadvantaged individuals and groupings in Sun International and its subsidiaries to more than 25% of the aggregate value of all of the group’s operations.

The final switch ratio of City Lodge shares to Sun International shares will be determined with reference to the R38,50 offer price of City Lodge and the market price of Sun International shares at the date of actual disposal of the City Lodge shares, the company added.

Sun International’s shares were last quoted on the JSE at R71,20, up 1,9% or R1,30 from Monday’s close of R69,90. City Lodge’s shares were up 1,3% or 50 cents at R38,50. — I-Net Bridge