SOUTH AFRICA – Sun International, a resort hotel chain and casino destination from South Africa, has rose its share price to more than 9percent on the JSE after the hotel chain and casino company agreed to sell its 64.94percent majority stake in Latin American (Latam) operation Sun Dreams for US$160 million (R2.75 billion) and settled the dispute with its partner, Nueva Inversiones Pacifico Sur.

Sun International’s subsidiary, Sun Latam, in Chile entered into a share purchase agreement last year with Pacifico for the sale of 14.94percent of Sun Latam’s shareholding in Sun Dreams for US$85.8 million, resulting in each party holding a 50percent equity interest in Sun Dreams.

But the two parties have been embroiled in a dispute regarding the initial transaction, and Sun Latam initiated arbitration proceedings against Pacifico before the International Chamber of Commerce in Chile to resolve the dispute.

“The proceeds from the settlement payment will be used to settle and extinguish Sun International’s offshore debt in Latam of US$38.3 million, with the balance being repatriated back to South Africa,” the group said.

The parties reached a new agreement following the impact of the Covid-19 pandemic on the group and taking into consideration the challenges facing Latam and South Africa, the length of time, uncertainty and costs associated with arbitration proceedings in a foreign country.

Lee-Anne Bac, a director at BDO Advisory, said the move to lockdown level 2 would go a long way in helping to restore the travel and tourism sector in South Africa.

“Is it good enough for the industry to function fully? Absolutely not, but some business is better than none. But the good thing about opening up to domestic leisure travellers is that we can showcase how our travel and tourism sector has adopted the necessary protocols to operate safely in these Covid-19 times. This will stand our country in good stead when international borders do open, which will be soon, hopefully,” Bac said.

Sun International announced a R1.2 billion  (US$70.79m) rights offer in June in an effort to improve its liquidity and strengthen its balance sheet in response to the Covid-19 outbreak.

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