JSE-listed resort hotel group Sun International plans to acquire gaming and hotel company Peermont Group, which owns Emperors Palace, in Gauteng, and Graceland, in Mpumalanga, for about R9.43-billion, as it seeks new growth opportunities.

Sun International on Friday said it would acquire 100% of the issued ordinary shares of invesmtent company Maxshell and the preference shares and mezzanine debt in the form of payment in kind notes issued by subsidiaries of Maxshell.

Sun International would part-fund the acquisition through the issue of 10.4-million shares at R120 a share to Peermont shareholders, which would be valued at R1.25-billion.

It would also further use the proceeds from a proposed R3.7-billion rights offer to part-fund the deal; roll over R3.75-billion of Peermont’s senior debt and enter into a new R575-million debt facility.

Sun International expected the proposed deal to close within 9 to 12 months.

“The acquisition of Emperors Palace, near the OR Tambo International airport, provides us with an opportunity to increase gaming revenue from Gauteng, as it is the provincial jurisdiction with the highest gambling spend in South Africa,” Sun International said in a statement.

One of the largest casinos in South Africa, Emperors Palace held an attractive financial and operating profile, with an earnings before interest, taxes, depreciation and amortisation (Ebitda) margin of greater than 41%. Peermont recorded an Ebitda of R1.21-billion in the 2014 financial year, with Emperors Palace contributing R872-million.

Peermont operated a portfolio of 13 gaming and hospitality businesses in South Africa and Botswana, comprising nine casino resorts, three standalone hotels and one standalone casino.     

The acquisition would also include the Thaba Moshate casino resort in Burgersfort, which was scheduled to open in April and which was anticipated to generate R40-million Ebitda in its first full year of operations.

MOVING MORULA
Meanwhile, Sun International had also received approval from the Gauteng Gambling Board to amend its Morula casino licence to move from the current site in Mabopane to Menlyn, in Pretoria.

“This paves the way for the company to start planning and construction of the R3-billion development to be known as Time Square at Menlyn Maine,” the group said.

Menlyn Maine was expected to generate Ebitda of R600-million and management fees of R95-million, a significant increase from the Morula Ebitda of R16-million as of June last year.