Tsogo Sun deal puts Gold Reef BEE at risk
Business Report
17 March 2009

GOLD Reef Resorts was concerned its black economic empowerment (BEE) status might have been compromised because Tsogo Sun bought a 23 percent stake from "various black BEE shareholders and on the market", chief executive Steven Joffe said yesterday.

Pointing out that Tsogo Sun was "on a pure flow-through principle, less than 50 percent black-owned", he said Gold Reef had petitioned the gaming boards concerned to confirm that "the group's various empowerment commitments relating to shareholding specified in the group's various gaming licences remain adequate".

If the gaming boards objected, the Tsogo Sun transactions could be reversed. Joffe was not concerned about which way their decision went.

Marcel von Aulock, Tsogo Sun's strategic planning director, said yesterday that the company was a black empowerment firm owned by management and Hosken Consolidated Investments, and its investment in Gold Reef City was approved by the Natal Gaming Board.

Von Aulock said Tsogo Sun had wanted to acquire only 23 percent of Gold Reef and was not planning to buy more. "It looks as though they want to choose their shareholders, and of course they cannot do that."

Gold Reef Resorts reported yesterday that profit from the new Silverstar Casino in Gauteng lifted last year's revenue by 29.1 percent to R2.2 billion.

The gaming market in Gauteng grew by 7.8 percent during the year in spite of difficult conditions. Silverstar Casino, which contributed a full year's profit for the first time, achieved an 8.5 percent market share and reduced the group's dependency on its flagship Gold Reef City.

"As a result Gold Reef has managed to grow its share of the Gauteng market to 24.5 percent," the directors said.

"Efforts to consolidate joint opportunities in the Gauteng market as well as individually in their respective target markets will position both Gold Reef City and Silverstar Casino for optimal growth.".

A 4.4 percent fall in visitors to Gold Reef City and higher costs due to inflation led to a fall of 0.4 percent in the resort's revenue to R990 million.

Lower attendance at the resort's theatre caused a loss of R21 million.

Despite heavy rain affecting visitor numbers, the theme park earned R67 million, helped by the opening of more food and beverage facilities.

Silverstar Casino attracted increasing numbers during the year as more facilities were completed.

The gaming mix was improved and the casino now had 784 slots and 24 tables.

Capital spending on the project during the year was R282 million, bringing the total cost to Rl.l billion. This was well within budget.

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