Media

Sun International sells equity stake for R392m

Business Report

November 8, 2005
By Lukanyo Mnyanda

Johannesburg - Sun International, the country's biggest hotel operator, has agreed to sell a 7 percent stake for R392 million to a group of black investors that includes senior members of the ANC. Investors in the company that will buy the shares include Mohammed Valli Moosa, the former minister of environmental affairs and tourism, and his business partner, Popo Molefe, a former premier of the North West, where Johannesburg-based Sun International's best-known resort, Sun City, is situated.

Sun International would sell the stake to a business called Dinokana Investments for R77 a share, according to a stock exchange statement released yesterday. Lereko Investments, of which Moosa and Molefe are directors, will control a 1.96 percent stake in Sun International through a 28 percent holding in Dinokana, the hotel operator said.The deal will help Sun International meet black economic empowerment (BEE) ownership obligations.The Sun International Share Trust, which represents the company's staff, had been allocated 43 percent of the shares in Dinokana, while another trust to be set up for the benefit of current and future black managers would hold 6 percent, the company said.

Black economic empowerment "will be a key driver of sustainable economic growth and transformation in South Africa", Sun International said in its statement. Selling a stake of "not less than 5 percent" to black investors was also a condition for its gaming licences in North West, it said. The company, which operated casinos and hotels in South Africa's homelands during apartheid, said the stake was worth about R604 million. The homelands were the only parts of the country where the apartheid government allowed casinos to operate. Sun International shares gained 0.6 percent to R79 yesterday, while the hotels and leisure sector of the JSE gained 0.55 percent. The stock has added 38 percent this year, beating the 33 percent gain by the benchmark FTSE/JSE Africa all share index.

Meanwhile, Sun International has increased chief executive Peter Bacon's annual pay by 16 percent after profit surged. Bacon's pay rose to R8.83 million in the year to June from R7.58 million in the prior period, the company said in its annual report, posted on its website yesterday. The chief executive's compensation included a R3.4 million salary and a R4.5 million bonus. Sun International said on August 30 that annual earnings had jumped 62 percent after the lowest interest rates in 24 years boosted spending at its casinos. - Bloomberg

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