The South African hotel and casino group, Sun International is looking for ways to pay off its mounting debt pile, and the company announced some of the methods it will use to do so. This week, Sun International said that it plans to sell off some 25.9 million shares so that it can raise R1.5 billion to repay some of what it owes.
According to an article that appeared in Moneyweb, Sun International will offer its shares for R57.83 in a rights offer. They will be available at a ratio of 25.34 rights offer shares for every existing 100 shares in the company as of May 18th, 2018.
By going down this path, Sun International hopes to move forward and enter into debt agreements. However, before debt agreements can take place, they will need to use the proceeds that it raises from the share sales to repay debts.
To help in this process, Value Capital Partners will, to a degree, support the rights offer up to the rate of R750 million.
Due to relatively slow growth in South Africa’s casino market, Sun International decided to diversify its products and enter new markets. Around a decade ago, Sun International moved into the Chilean casino industry and later expanded to other South American countries.
However, in March this year, Sun International said that it had to close down operations that were not turning profit and listed some of the properties which would be shut in South Africa, Panama and Columbia. Among the properties were listed were the Fish River Sun Resort near Port Alfred, as well as the International VIP Business in South Africa and Panama.
The Fish River Sun has already been closed after a dispute on the property over land claims led to the decision.
At the moment, Sun International is experiencing performance problems at the Naledi Sun Hotel and Casino in the Free State, as well as The Carousel Casino in the North West province. Sun International has also applied to the Eastern Cape Gaming Board to restructure the Boardwalk Casino in Port Elizabeth.