Listed gaming and hotels group Peermont Global has agreed to acquire a controlling stake in the Tusk Casino Resorts and Hotels group for a total of between R440,3-million and R583-million in cash, the company announced on Wednesday.
Peermont owns the Emperors Palace casino and hotel complex in Johannesburg, as well as several others.
The Tusk group, meanwhile, owns and manages casinos and hotels including the Tusk Mmabatho Casino Resort in Mafikeng, the Tusk Rio Casino in Taung, the Tusk Venda Casino Hotel in Thohoyandou and the Tusk Umfolozi Casino in Empangeni. Overall, it has a total of 838 slot machines, 35 gaming tables and 271 hotel rooms, generating revenue of R137,4-million and earnings before interest, tax, depreciation and amortisation of R49-million for the six months to the end of September 2005.
Explaining its reasons for the acquisition, Peermont said it believes it will able to extract synergies between the two groups, particularly as the Tusk Rio and Tusk Umfolozi casinos have no hotels and will not receive permanent casino licenses until these and other entertainment facilities are fully developed.
Peermont will develop these properties into “multifaceted” resorts, it said.
Peermont will fund the purchase through a combination of available cash holdings, preference share funding and borrowing, it added.
It will set up a holding company — Peermont Tusk Holdco — to acquire the Tusk assets from current shareholders, including Thebe Investment Corporation subsidiaries Moribo Investments and Alliance Investment Holdings, and Tusk management.
The Tusk group’s remaining black economic empowerment (BEE) shareholders will be Gottam Investments and the staff trust, which collectively hold a 30% stake in Tusk Resorts. Peermont said it will restructure the BEE shareholding at Peermont Tusk Holdco level to ensure that the Holdco’s BEE shareholding is at least 26% of the company’s issued share capital.
Peermont will end up with an effective 70% interest in the casino and hotel operations of Tusk Resorts, 100% of Emanzini and 100% of the casino-management companies of the Tusk group. Its total purchase consideration will be a minimum and maximum of R440,3-million and R583-million, respectively, depending on the financial performance of the Tusk group to March 31 next year.
The transaction is dependent on several conditions, including the approval of the competition authorities, provincial gaming boards and others. It is expected to be finalised by the end of May next year, Peermont said. — I-Net Bridge