Deal of the century for GPI or HCI?
An affordable option for empowered gaming groups
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.