Deal of the cen­tury for GPI or HCI?

An af­ford­able op­tion for em­pow­ered gam­ing groups

Finweek English Edition - - Companies & Markets - MARC HASEN­FUSS

RE­CENT RE­PORTS SUG­GEST­ING United States-based casino group Cen­tury Casi­nos is open to of­fers for its two small South African op­er­a­tions is bound to get ad­ven­tur­ous gam­ing in­vestors in a spin. Cen­tury op­er­ates the Cale­don and New­cas­tle casi­nos, which form part of an in­ter­na­tional gam­ing port­fo­lio that spans the US and East­ern Europe, as well as cruise ship-based casi­nos.

While both Cale­don and New­cas­tle would po­litely be termed “small town op­er­a­tions”, the casi­nos are both prof­itable and poised to ben­e­fit over the longer term from tourism growth and in­fras­truc­tural de­vel­op­ment. It’s not cer­tain why Cen­tury is re­port­edly will­ing to look at of­fers for the casi­nos, save to say the Cale­don casino has felt some strain since Sun In­ter­na­tional ex­panded its flag­ship GrandWest casino and opened its nearby Worces­ter casino.

Cen­tury’s quar­terly re­port to end-June 2008 showed the Cale­don casino’s net op­er­at­ing rev­enue up only marginally at R31,6m, with its share of the West­ern Cape gam­ing mar­ket drop­ping from 5% to 4,7%.

But it’s the re­turns from its SA casi­nos

that might be wor­ry­ing Cen­tury. The Cale­don casino’s quar­terly EBITDA dropped markedly from US$1,7m to less than $1,4m – mainly due to the weaker US dol­lar/rand ex­change rate.

The Cen­tury Casino & Ho­tel in New­cas­tle saw a 3% in­crease in net op­er­at­ing rev­enue to R22,4m in the quar­ter to end-June 2008. But the casino’s EBITDA dropped from $256 000 to $246 000 – again be­cause of the weaker ex­change rate.

Fin­week reck­ons if Cen­tury Casi­nos is dan­gling its SA op­er­a­tions, then re­cently listed Grand Pa­rade In­vest­ments (GPI) and gam­ing aligned empowerment in­vest­ment group Hosken Con­sol­i­dated In­vest­ments (HCI) would be the most likely con­tenders to make of­fers.

Both HCI (which re­cently took a sig­nif­i­cant stake in Gold Reef Re­sorts) and GPI (which re­cently bought a strate­gic stake in Real Africa Hold­ings) have openly ex­pressed a de­sire to bol­ster their gam­ing in­ter­ests. Both com­pa­nies have strong empowerment cre­den­tials and, per­haps more im­por­tantly, have the means to pitch a cash of­fer to Cen­tury Casi­nos.

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