Sun International secures easier loan terms to weather Covid hit - sources

9th July 2021

By: Reuters

  

Font size: - +

Sun International has agreed easier borrowing terms with its lenders, two sources told Reuters, giving South Africa's biggest casino firm a year of financial breathing space as a third wave of Covid-19 crashes over the tourism industry.

The deal with Standard Bank, Absa Group and Nedbank essentially helps Sun stave off any prospect of default, said one of the sources, who was directly involved in the deal.

It is also a sign banks will continue to support the stricken hospitality industry more generally, said the second source, from one of Sun's leaders.

Sun International had R7.67-billion of debt as of March 31.

"Absa and the other lenders remain supportive of Sun International and the measures taken by management," Absa said in an emailed response to questions, without giving details.

Standard Bank and Nedbank declined to comment.

Sun said it would announce any new information with its interim results in September.

South Africa is the continent's worst-affected nation in terms of coronavirus cases and deaths, accounting for more than a third of confirmed infections and over 40% of fatalities. Only 6% of the country has received one or more doses of a vaccine.

The government has tightened restrictions recently as cases have picked up again, forcing most hotels and casinos to close temporarily.

The sources said the new deal covered terms of payment, known as covenants, but declined to give the precise details.

A covenant is usually a measure of debt-to-core earnings (Ebitda) and is closely monitored by banks as part of loan repayment terms.

"A new covenant has been agreed to, which is obviously higher. And it is likely for a 12-month period and will be measured quarterly," said the source directly involved in the deal, adding it was signed at the end of June.

A higher ratio would allow Sun to have more debt or lower operating profit, or both.

Wayne McCurrie, a portfolio manager at the investment arm of banking group FNB, said covenant waivers were "hugely" important for the hospitality sector.

"Banks know that the hospitality industry needs to stay afloat till the end of this year or early next year and after that South African consumer expenditure numbers show that there will be actually be a boom," he said.

Edited by Reuters

Comments

The content you are trying to access is only available to subscribers.

If you are already a subscriber, you can Login Here.

If you are not a subscriber, you can subscribe now, by selecting one of the below options.

For more information or assistance, please contact us at subscriptions@creamermedia.co.za.

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION