The budget hotel chain City Lodge in South Africa will have 38.6% of its shares on offer to investors after Sun International decided to dispose of its stake. The reasoning behind the Sun International decision is to use the estimated R627 million that the sale will bring to buy back some of its own shares and make 5% of them available to black economic empowerment (BEE) investors. The City Lodge shares will be disposed of at a fixed price of R38.50 plus a 4.3% premium in exchange for Sun International shares.

Recently the North West Gambling Board has made BEE levels and management participation as part of a gaming licence requirement for the region. Sun International operates its flagship Sun City/Lost City properties under North West regulations, as well as Morula Sun and the Carousel. When the transaction with shares is completed then BEE groups and individuals will hold more than 25% interest in Sun International and its subsidiaries.

Earlier this month Sun International posted a sharp increase in headline earnings for the second half of 2004. Revenue rose 15% to over R2.5 billion, mostly attributable to casino revenues benefiting from the stronger South African economy creating higher disposable incomes. The company continues to seek expansion into overseas markets. Projects in Great Britain are being delayed and altered by lack of progress and changes to the Gambling Bill, and the result of Sun International's reported bid for the Singapore integrated resort will be known on April 18 - when the government makes known its decision on whether to proceed with licensing a casino in the city-state. (E-03.24.05)

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