Sun International Limited, a leading hospitality and leisure group led by South African executive Anthony Leeming, has announced a definitive agreement to divest its Nigerian interests to Rutam Finance Company Limited (RFC) for approximately R275 million ($14.4 million).
Strategic exit aligns with core focus
The move follows Sun International’s intention to streamline operations and focus on core markets. Sun International entered the Nigerian market in 2009 but faced challenges in recent years due to a difficult operating environment. This divestiture aligns with the company’s strategic objectives and signals a shift in portfolio management.
With Anthony Leeming at the helm of Sun International, the leading hospitality and leisure group will sell a 43.3-percent equity stake in Tourist Company of Nigeria PLC (TCN), which operates the Federal Palace Hotel in Lagos, to RFC for $1.875 million.
Additionally, the group will dispose of its entire $12.675-million loan to RFC, marking a complete exit from the Nigerian market. The company also plans to sell its remaining six-percent stake in TCN in due course.
Sun International expects $14 million cash inflow
The transaction, subject to customary closing conditions including regulatory approvals, is expected to generate a cash inflow of approximately R275 million ($14.41 million) for Sun Intl. These proceeds will be used to reduce debt.
Following the transaction’s completion, TCN will no longer be consolidated in Sun International’s financial statements. This will result in a reduction of group debt by approximately R800 million ($41.82 million), excluding IFRS 16 lease liabilities.
The closing is targeted for no later than May 28, 2024, subject to all customary closing conditions being met. Key approvals include those from the Nigerian Competition Authority, the Securities and Exchange Commission, and the Nigerian Stock Exchange.
Growth strategy elevates Sun International
Founded in 1968 by the late Sol Kerzner, Sun International has become a leading gaming and hospitality player under Leeming’s leadership. The company delivered a strong financial performance in fiscal 2023, with revenue rising seven percent to R12.10 billion ($646.14 million) and headline earnings surging 86 percent to R1.04 billion ($55.35 million).
This underscores Sun International’s resilience and strategic vision. Sun International’s exit from Nigeria signifies its commitment to optimizing its portfolio and pursuing growth opportunities in core markets.
With a rich history and a focus on the future, this transaction emphasizes the company’s dedication to creating value for shareholders and stakeholders while solidifying its position in the gaming and hospitality industries.
