Home Business and Technology Sun International Says Final Goodbye to Sun Dreams

Sun International Says Final Goodbye to Sun Dreams

Sun International

In 2019, Chilean subsidiary of Sun International, Sun Latam, commenced the share purchase agreement with the partner Nueva Inversiones Pacifico Sur Limitada. The agreement stated that 14.49 per cent of shareholding Sun Latam has in Sun Dreams will go to Pacifico for R1.49 billion. That would result in a 50 per cent equity interest for both parties regarding Sun Dreams.

But the two parties ended up in a dispute concerning the initial transaction. The International Chamber of Commerce in Chile was to resolve the dispute after Sun Latam started arbitration proceedings against Pacifico.

Nevertheless, in the end, parties reached the settlement on their own. They’ve announced a new arrangement, in which Sun International will sell its entire shareholding (69.49 per cent) of Sun Dreams to Pacifico for R2.75 billion. Sun International will use the proceeds from this settlement payment to extinguish its offshore debt in Latam and the balance will be repatriated back to South Africa.

How it All Started

It seems that at the heart of the dispute has been the fact that Pacifico didn’t make their offer quite official.

Just two days after Pacifico went to the media saying they’ve made a formal proposal to Sun International’s board, the arbitrary international dispute began, concerning the lack of payment of R1.49 billion for the shares. Pacifico claimed that the dispute didn’t start due to the lack of payment,  but because ʽcertain conditions precedent were not fulfilledʽ.

Sun International claimed that the Pacifico’s proposal was just one more in a series of ʽnon-bindingʼ and ʽunsolicitedʼ ones as they’ve never received the formal offer. They’ve backed up that statement adding that the Pacifico’s unsolicited offer caused their share price to plunge.

That seems plausible but in a later statement, Sun International accused Pacifico of walking away from a transaction. So, even if the offer was an unsolicited one, Sun International was ready to accept it at a certain point. And there’s a good reason why.

The Fallout

Sun International has been wrestling with the fallout from the COVID-19 pandemic, which has shuttered hotels and casinos and disrupted travel. Due to the posed restrictions, many players have chosen to turn to online casinos, which resulted in substantially smaller traffic and therefore in smaller revenue for the land-based business in general.

On top of that, since December, Sun International has been carrying a debt of R13.3 billion and had to announce a sweeping operational overhaul in June, that included shuttering certain operations and job cuts.

Considering the fact that their share has fallen by approximately three quarters during the past two years, the reason behind accepting even an unsolicited offer is obvious. And it makes even more sense why they decided to accept the settlement without any further dispute expenses.

A Proud Legacy

The superior resorts and hotels profiles make Sun International a recognized premium brand. It can boast with its well-located and modern casinos, premier resorts, and five-star world-class hotels. Focused on South Africa and Latin America, their destinations offer enduring quality, incredible adventure, and experiential luxury, crowned by the authentic dedication to personal service. Currently the largest casino operator in Latin America, they have casinos in Columbia, Argentina, Panama, Peru, and Chile.

All this is saying that this brand has a proud legacy in the hospitality, entertainment, and gaming sector. But even the greatest the best-led land-based casinos are currently experiencing a crisis. With coronavirus restrictions and online gambling on the rise, problems and disputes like this one are becoming more common.