Tsogo Sun slows spending to counter mounting debts

Tsogo Sun slows spending to counter mounting debts

South Africa’s biggest hotel and casino operator, Tsogo Sun Holdings Ltd. (TSH), has seen its business boom. Unfortunately, it has seen its deTsogo Sun slows spending to counter mounting debtsbt boom, as well. TSH has announced that it will put the brakes on acquisitions and business expansion as it attempts to corral its debt.

In an interview with Bloomberg, TSH CEO Jacques Booysen confirmed the hotel and casino operator has been looking at opportunities, “but obviously we’re mindful of the fact that our debt levels are higher than they used to be. We are not just out there to buy anything that comes up for sale.”

Putting the brakes on investments doesn’t mean that TSH plans to halt expansion completely. It still intends to launch its Garden Court in Zambia, as well as a Southern Sun hotel in Ghana. Both should be open by sometime next year, according to Booysen. TSH will also continue with renovations at the Suncoast in Durban, South Africa, a project that carries a price tag of $127 million.

Booysen also told the news outlet, “We’ve got opportunities in the Western Cape, with the possible relocation of the smaller casinos into the metropole. Also in Cape Town, Tsogo has opened StayEasy budget hotels in the city, and Maputo.”

TSH, headquartered in Johannesburg, South Africa, reduced its spending in the most previous fiscal year by 8%, dropping it down to $261.5 million. Investments still covered include the purchase of Gameco, which has already generated $50 million in revenue for the company. Gameco was purchased last November in a deal that offered TSH shares and $136 million to Gameco shareholders.

The net debt for TSH increased 4% for this last fiscal year. The debt was just over $1 billion, up from $288 million at the end of 2013. TSH saw its stock value drop as part of a larger selloff in South African equities, and the company currently has a market value of just above $2 billion.

TSH owns more than 100 hotels in Africa, the Middle East and the Seychelles. It also has 13 gaming and entertainment destinations, as well as more than 250 conference and banquet facilities. It is one of the largest companies listed on the Johannesburg Stock Exchange. Since June 2017, Booysen has served as the CEO, following his 10-year role as the company’s managing director of Gaming.