Tsogo Sun, a casino operator based out of South Africa, had plans to offload seven of its casino and hotel properties to the Hospitality Property Fund. However, the deal has now gone south, with the company not receiving the support from shareholders that it had anticipated.
In a company statement from the past Monday, Tsogo announced, “The sale of shares and subscription agreement has been terminated by agreement between Tsogo, Hospitality and the remaining parties to that agreement.” Tsogo had expected to receive around $1.72 billion for the acquisitions.
This past September, a general meeting held been held to pass special resolutions related to the sale. The meeting was adjourned without conclusion, with the chairman of Tsogo’s board setting a new meeting for this past Monday. At that meeting, Tsogo told shareholders that the deal would be scrapped because it was obvious the sale was not supported by the shareholders.
Tsogo had suggested that it sell 100% of the issued share capital in Listed and Cassava – which own the Casino Precinct Properties – to Hospitality. It would also subscribe over one billion Hospitality shares through the deal, which would make Tsogo the 87% owner of Hospitality.
The chairman explained, “Accordingly, the Tsogo board of directors had withdrawn the resolutions that were to have been considered at the reconvened general meeting and the sale of shares and subscription agreement was terminated by agreement between Tsogo, Hospitality, and the remaining parties to that agreement. As such, no resolutions were proposed for consideration at the reconvened general meeting and the meeting terminated.”
The release of the properties was part of a larger plan to split the company into three separate entities – hotel management, gaming and property. The possibility of selling the properties came up only about a year after Tsogo sold hotel assets worth over $410 million. It used the money to purchase a 50.6% stake in Hospitality.
That sale helped the company generate an 11% increase in revenue, but the climb was short-lived. The split has not been pursued further and the company has had to curb spending in the second half of 2017 and the first quarter of 2018.