Sun International’s chief executive said on Thursday an unsolicited offer by the South African company’s Chilean partner to buy a 50.1% stake in the casino and hotel operator has little chance of success.
On Tuesday Chilean investment firm Nueva Inversiones Pacifico Sur (IPS) proposed buying a R1.5 billion stake in Sun International in a part-cash offer that also includes a bridge loan of up to R1.2 billion.
“It is surprising and unfortunate that IPS chose to go public with an unsolicited announcement that is neither an offer nor a firm commitment to make an offer,” Sun International CEO Anthony Leeming said in a statement.
“They have not even discussed the offer with our major shareholders and had they done so, as we have, they would have realised their proposal has little chance of success.”
On Wednesday Value Capital Partners, the second largest shareholder in Sun International with a 20.23% stake, opposed the offer, with CEO Sam Sithole saying it “significantly” undervalued the company.
Leeming said the company has previously received several similar unsolicited, non-binding proposals from IPS.
As with these previous proposals, the recent one lists stringent pre-conditions “but fails to address any concerns raised by Sun International, including the significant and material litigation claim which Sun International has against IPS”, he added.
IPS and Sun Dreams, the Latin American subsidiary of Sun International, about 35%-owned by IPS, are currently in a dispute relating to a proposed disposal by Sun International of a 15% equity interest in Sun Dreams to IPS.
Leeming added that the company’s full focus for now was on pushing ahead with its proposed R1.2 billion rights offer, which IPS also intends to support and underwrite at least 50.1% of as part of its offer.