Gold Reef boosts BEE shareholding
Business Day
12 March 2007

Janet Parker
Leisure Industries Editor

GAMING group Gold Reef Resorts has consolidated its black economic shareholding at group level and increased its empowerment shareholding to more than 25% in a series of deals worth more than R1,4bn.

In the first part of the deal, Gold Reef Resorts traded shares in the company for shareholdings of its empowerment partners in certain of its casinos.

This has brought its stake in Gold Reef City, Silverstar Casino, Golden Horse Casino and Goldfields Casino to 100%. In the case of Casino Mykonos, Gold Reef increased its stake 10% to 70,4%.

The sum of these deals means that a total of 55,2-million Gold Reef shares — or 21,03% of the company — will be issued for the share exchange.

In addition, in a top-up deal designed to bring Gold Reef Resorts’ broad-based black empowerment shareholding to the 25%-plus level required by government, about 14-million Gold Reef shares will be issued for cash to some of the same empowerment partners at R20,50 a share — amounting to R287m — taking empowerment participation in the company to more than 25,1%.

A Johannesburg analyst said the deals had cleaned up the group’s shareholding in its underlying companies — except for its Garden Route operation, where a deal could be announced in the next 12 months.

The move to boost the empowerment shareholding was to be expected, as it was required by the trade and industry department’s codes of good practice and Gold Reef had to comply with the Gaming Board’s empowerment recommendations, the analyst said.

The transaction is still subject to a number of conditions, among them regulatory approval and shareholder approval, expected at a general meeting to be held on April 25.

The group has also boosted empowerment representation on its board to 25% with three appointments. Bongani Biyela, previously the GM of Gold Reef City Casino, will be appointed as executive director, and Richard Moloko and Patrick September will be appointed nonexecutive directors.

Initially, the deal will dilute the group’s earnings, however, Gold Reef CEO Steve Joffe said the deals would boost earnings from next year onwards.

News of the deal caused the Gold Reef counter to gain 2,4% or 55c to trade at R23,45c on Friday.

Gold Reef’s share price has gained more than 43% in the past six months and 57,9% over the last year.

Joffe said: “We view empowerment as a business imperative and believe that the increased shareholding will create long-term financial benefits for our shareholders.”

<< Back