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Acquisition by Tsogo of a minority interest in each of Sunwest and Worcester
TSOGO SUN HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
Registration number: 1989/002108/06
Share Code: TSH ISIN: ZAE000156238
(“Tsogo”)
ACQUISITION BY TSOGO OF A MINORITY INTEREST IN EACH OF SUNWEST AND WORCESTER
1. Introduction
The board of directors of Tsogo is pleased to announce that on 12 May 2014, Tsogo, Sun International
Limited (“Sun International”), Grand Parade Investments Limited (“GPI”), and various of Sun
International and GPI’s subsidiaries entered into transaction agreements (the “Transaction
Agreements”) in terms of which Tsogo will acquire a 40% equity interest in each of SunWest International
Proprietary Limited (“SunWest”) and Worcester Casino Proprietary Limited (“Worcester”) (collectively,
the “Proposed Transaction”) for an aggregate consideration of R2,185 million.
In terms of the Proposed Transaction, Tsogo will acquire a 14.9% equity interest in SunWest and a 14.9%
equity interest in Worcester from Sun International (South Africa) Limited (“SISA”), a wholly-owned
subsidiary of Sun International, and Afrisun Leisure Proprietary Limited, a subsidiary of Sun International,
respectively, for an aggregate consideration of R635 million. Tsogo will subscribe for new shares in
SunWest and Worcester for an aggregate subscription price of R1,550 million and each of SunWest and
Worcester will undertake a specific share repurchase for the entire equity interest held by GPI and its
subsidiaries in SunWest and Worcester for an aggregate cash consideration of R1,550 million.
The Proposed Transaction is subject to the fulfilment (or waiver, as the case may be) of the conditions
precedent referred to in paragraph 5 below, and the effective date of the Proposed Transaction will be the
third business day following the date when all the conditions precedent are fulfilled or waived (“Effective
Date”).
2. Information about SunWest and Worcester
SunWest
SunWest, a subsidiary of SISA, conducts the casino, leisure and entertainment business in respect of the
GrandWest Casino and Entertainment World at Goodwood in Cape Town. SunWest also owns the hotel
business in respect of the Table Bay Hotel situated at the Victoria & Alfred Waterfront in Cape Town and
owns a 24.8% equity interest in the Cape Town International Convention Centre Company SOC Limited.
The current equity interests in SunWest, prior to the Proposed Transaction, are as follows:
Shareholder % equity
interest
SISA and its subsidiaries 71.6%
GPI and its subsidiaries 25.1%
Sun International Employee Share Trust (“SIEST”) 3.3%
Worcester
Worcester, a subsidiary of SISA, conducts the casino, hotel, leisure and entertainment business in
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respect of the Golden Valley Casino at Breede River Valley in Worcester.
The current equity interests in Worcester, prior to the Proposed Transaction, are as follows:
Shareholder % equity
interest
SISA and its subsidiaries 71.4%
GPI 25.1%
SIEST 3.5%
3. Rationale
The Proposed Transaction represents an attractive investment opportunity for Tsogo which will provide
Tsogo with an interest in quality casino assets in an area where Tsogo has limited exposure. The
Proposed Transaction is consistent with Tsogo’s growth strategy of allocating capital to attractive
opportunities in the hotel and gaming sector.
4. Terms of the Proposed Transaction
4.1. Purchase consideration
The aggregate consideration payable by Tsogo in terms of the Proposed Transaction is
R2,185 million which will be settled in cash on the Effective Date and will be funded from Tsogo’s
existing resources.
4.2. Tsogo’s participation in SunWest and Worcester
Tsogo will be a minority shareholder in SunWest and Worcester and will not have any operational
responsibilities. All operations of each of SunWest and Worcester will continue to be managed by
Sun International Management Limited, a subsidiary of Sun International, under its existing
management contracts.
The equity interests in SunWest and Worcester after implementation of the Proposed Transaction
will be as follows:
Shareholder SunWest Worcester
% equity % equity
interest interest
SISA and subsidiaries 56.7% 56.5%
Tsogo 40.0% 40.0%
SIEST 3.3% 3.5%
5. Conditions precedent
The Proposed Transaction is subject to the fulfilment (or waiver, where applicable) of, inter alia, the
following conditions precedent:
5.1. the shareholders of GPI having approved the Proposed Transaction, in accordance with the terms
of the Transaction Agreements;
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5.2. the requisite resolutions of the shareholders of GPI (referred to in paragraph 5.1) shall not have
been set aside by the court in accordance with sections 115(7) of the Companies Act;
5.3. independent experts appointed by SunWest and Worcester in terms of section 114(2) of the
Companies Act having delivering to the respective boards and the shareholders of those
companies the report referred to in section 114(3) of the Companies Act;
5.4. the shareholders and directors of SunWest and Worcester passing the necessary resolutions for
implementation of the Proposed Transaction and the lodging of any applicable notices of
amendment to the Memorandum of Incorporation having been filed with the Companies and
Intellectual Property Commission;
5.5. the release of GPI and its subsidiaries’ shares in SunWest and Worcester from the security
interests held over them;
5.6. the requisite approvals for the Proposed Transaction having been obtained from the JSE Limited
(“JSE”), the Takeover Regulations Panel, the relevant provincial Gambling Authorities and the
Competition Authorities; and
5.7. the shareholders of Sun International approving the placing of shares under the control of the
directors of Sun International to give effect to an undertaking in terms of which, in the event that an
offeror acquires 35% or more of the issued shares of Sun International, Sun International may be
required to issue shares in Sun International to Tsogo in exchange for some or all of Tsogo's
shares in SunWest and Worcester.
6. Pro forma financial effects
The pro forma financial effects of the Proposed Transaction on Tsogo’s historical earnings, headline
earnings, net asset value and net tangible asset value are not significant.
7. Categorisation
In terms of the Listings Requirements of the JSE, the Proposed Transaction constitutes a category 2
transaction for Tsogo and, accordingly, does not require approval by Tsogo shareholders.
Fourways
13 May 2014
Investment bank and transaction sponsor
Investec Bank Limited
Corporate law adviser
Tabacks Incorporated
Sponsor
Deutsche Securities (SA) Proprietary Limited
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