Ezulwini: With Sun International looking to divest its operations in its Eswatini market, His Majesty King Mswati III has been given an option to take up his option to acquire his stake in the Royal Swazi Spa Valley Resort.
Through Tibiyo Taka Ngwane, the King holds about 39.7 percent, Sun International and Minor International (MINT) holds 50.6 percent and the remainder is held by the general public. Should the King finds it to be making business sense to acquire the shares which are being disposed by Sun International, he might end up being the major shareholder. “Sun International is therefore looking to divest its operations in each market. The ruler (Ingwenyama) of Eswatini is to take up his option to acquire its stake in the Royal Swazi Spa Valley Resort,” Sun International was reported to have said by iGaming.
This comes after the South African casino operator, Sun International has reported a 56.2 percent year-on-year decline in revenue for the first half of the year, after novel coronavirus forced its properties to close midway through the first quarter of 2020. The operator will now look reshape its business in the wake of the pandemic.
This is contained in a report published by the iGaming Business Ltd on September 1, 2020 where the hospitality industry guru, franchising under the Swazi Spa Holdings, would be looking into divesting its operations in the Eswatini and the Nigerian markets.
According to the report, revenue for the six months to 30 June fell to E3.71 billion (£165.0 million /€184.9m/$221.6 million), after its land-based operations ground to a halt from mid-March. After operating costs, earnings before interest, tax, depreciation and amortisation (EBITDA) plummeted 96.3 percent to E79 million. Once depreciation and amortisation charges of E785m were factored in, the business swung to E706 million operating loss for the period, compared to a E1.25 billion operating profit in 2019.
The report revealed that the significant hike in depreciation and amortisation came amid plans to significantly restructure Sun International’s operations, with the operator launching a Section 189A retrenchment exercise, or redundancy process.
The operator explained that the disruption and financial hit caused by Covid-19, especially with upcoming licence renewals, meant it was no longer viable to retain its stake.
Sun International chief executive Anthony Leeming said while they anticipate the recovery will take time, they have placed the group on a firm footing for the future, realising operational and cost efficiencies and improving the guest experience that will position the group for growth when the outlook improves.
Speaking to the Times of Eswatini, Royal Swazi Spa General Manager Lance Rossouw said Sun International has been trying to divest their interest in Swazi Spa Holdings for eight years now, but complications hindered the sale. Rossouw said there is however, a progress appeared to be in the making.
In August 2014, Minor International Pcl (“MINT”) and Sun International Limited (“Sun International”) announced that terms were agreed whereby: (i)Sun International disposed a significant portion of its shareholdings and interest in its Botswana, Lesotho, Namibia, Eswatini and Zambia operations, consisting of eight properties (“African Assets”) to MINT for a total consideration of E679.5 million (USD 63.9 million), and (ii) Sun International and MINT are forming a new strategic partnership to own and operate the African Assets going forward (“Partnership”). The Partnership leveraged both companies’ core strengths and Sun International continued to manage the casino operations, while MINT assumed the hotel management, marketing and distribution under MINT’s Anantara and AVANI brands.
Sun International disposed of 50 percent of its interest in Zambia, and 80 percent of its interests in Botswana, Namibia, Lesotho, and Eswatini. As a result, MINT’s effective shareholding is (1) 50 percent in Zambia properties, which include 173-key Royal Livingstone and 212-key Zambezi Sun, (2) 64 percent in 196-key Gaborone Sun in Botswana, (3) 80 percent in 173-key Kalahari Sands in Namibia, (4) 37.5 percent in Lesotho properties, which include 158-key Lesotho Sun and 105-key Maseru Sun, and (5) 40.5 percent in Eswatini properties, which are 149-key Royal Swazi and 202-key Ezulwini Sun.