Gold Reef to reveal merger details soon  
Business Report
30 March 2010

Audrey D’Angelo

In the next few days gaming and entertainment group Gold Reef Resorts would produce documents showing the structure of its intended merger with the Tsogo Sun group, Gold Reef chief executive Steven Joffe said yesterday.

If the shareholders of both groups approved the changes, the gaming authorities would be asked to do the same.

The directors of Gold Reef were originally concerned when Tsogo Sun started buying shares in their company, fearing that it might compromise Gold Reef's standing as a black economic empowerment (BEE) company. But they were reassured by the gaming authorities and agreed to the merger after discussions.

Gold Reef holds an estimated 18 percent share of the South African gaming industry.

Joffe said yesterday that Tsogo Sun already held 25 percent of Gold Reef. The company also had operations overseas.

According to Joffe the only real opportunities for Gold Reef were in overseas expansions. It had already looked at several possibilities, including Chile, Asia and the US.

"We will go overseas when we find a project that ticks all the right boxes," he said.

If the Gold Reef and Tsogo Sun merger succeeds, the combined entity would be the 37th largest company on the JSE.

Despite the recession and capital expenditure of R206 million on refurbishing casinos, the company yesterday announced that it had lifted headline earnings a share by 1 percent to R1.319 for the year ending December. Revenues rose slightly to R2.2 billion and earnings before interest, tax, depreciation, amortisation and rentals lifted to R897m.

Describing these as "good results considering the tough economic conditions, with both revenues and profits up", Joffe said Gold Reef had gained market share in all provinces except KwaZulu-Natal.

It carried out multimillion-rand refurbishment projects at the Golden Horse casino in Pietermaritzburg, the Mykonos casino and Garden Route casino in the Western Cape and the Gold Reef City theme park hotel in Gauteng.

Gauteng remained "by far the largest province for the industry's gross gaming revenues with a 42 percent share" of total South African spend, the directors reported.

Gold Reef shares ended 0.7 percent higher at R19.

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