On Friday South Africa’s Securities Regulation Panel (SRP) blocked the private equity buyout of Gold Reef Resorts. The SRP said four rules had been contravened but has not yet released its reasons for deciding to block the sale. Gold Reef issued a statement today saying that it would await the publication of the panel’s reasons before commenting on the matter, but said the proposed deal was now off the table as the deadline expired last Friday and would not be extended.

According to the SRP, the proposed deal would not have been given approval if it had known about the withholding of crucial information regarding a previous higher offer. The South African High Court approved the transaction on the recommendation of the panel. The breach of SRP rules include the supply of information to shareholders and special deals with favourable conditions as well as frustrating activity of a deal.

Rival casino group Tsogo Sun has claimed that Gold Reef Chairman Maxim Krok accepted R12 million to support the private equity buyout although Tsogo Sun had offered an extra 50 cents per share. The Board of Gold Reef remains confident about the future prospects of the company. Despite a downturn in the economy business fundamentals remain sound and cash flow remains strong, but the company could face legal action by minority shareholders if they are prejudiced by the cancellation or delay of the deal. (E-02.04.08)

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