Sun International Shares Upsurge After Selling Majority Stake to Sun Dreams
Sun International, a leading resort hotel chain and casino destination from South Africa, marked an upsurge of over 9% in its share price on Friday after the company agreed to sell 64% of its majority stake in LaTam operations Sun Dreams for US$160 million along with settling the falling-out with its partner- Nueva Inversiones Pacifico Sur.
Last year, Sun International’s subsidiary- Sun Latam agreed on a share purchase with Pacifico for Sun Latam’s shareholding in Sun Dreams- around 14.9% of the shares for a value of US$85.8 million. This negotiation resulted in each partner with 50% equity interest in Sun Dreams.
However, as both the parties had a fall-out over the initial transaction, Sun Latam instigated arbitration proceedings against Pacifico, and took the matter to International Chamber of Commerce, Chile to make peace with the dispute.
A new agreement was announced on Friday where the share price of Sun International rose to R12.46 a share. Additionally, the stock lost around 41.6% since the inception of 2020 with the coronavirus pandemic crippling the hotel and tourism industry.
In response to the pandemic, Sun International had announced an R1.2bn (US$70.79m) rights offer in June.
According to a statement made by the company on Friday, the proceeds from the settlement payment will be utilized in modeling and settlement of Sun International’s offshore debt of $38.3 million in Latam.
