East London Casino conditions

Posted On Saturday, 07 July 2001 03:01 Published by
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EAST LONDON -- Gambling giant Sun International (SI) has applied to the Eastern Cape Gambling and Betting Board to relinquish the casino licence conditions for the Boardwalk casino in Port Elizabeth,

EAST LONDON -- Gambling giant Sun International (SI) has applied to the Eastern Cape Gambling and Betting Board to relinquish the casino licence conditions for the Boardwalk casino in Port Elizabeth, which call for the casino group to ensure the continued existence of its Mpekweni and
Fish River Sun properties.
The Boardwalk, which is supposed to cross-subsidise Mpekweni Sun, has recently confirmed that it
is to retrench staff.
There are, however, two concerns which the board has to address before making its decision known
in two weeks: the future of staff at Mpekweni and the possible reaction by the losing bidder, the
Southern Sun-controlled Tsogo Sun.
Should the board agree to the SI application, Tsogo Sun, which is busy constructing a casino resort
in East London, may argue that the initial grounds on which SI won the Port Elizabeth bid have fallen
away.
When approached yesterday, gambling board chairperson Joseph Lukwago-Mugerwa said it was premature
to discuss the matter.
"The board is still considering the issue and we will issue a statement in about two weeks," he
said.
The Daily Dispatch has learnt that the Eastern Cape Development Corporation (ECDC), which owns the
Mpekweni property, has had some offers from interested parties to buy it for sectional title
development.
One proposal is to construct between 30 and 40 luxury cabanas on the property.
ECDC chief executive Mcebisi Jonas was not available and corporate investments general manager Don
Mclean would not comment.
However, according to the conditions which the gambling board attached to SI's Emfuleni Resort
casino licence for Port Elizabeth, the group has to sustain employment and cross-subsidisation of
the Mpekweni Sun and Fish River Sun.
In his response to the licence being granted, SI managing director Peter Bacon said at the time:
"This latest licence is a particularly pleasing one to win for many reasons, not least of which is
that it helps ensure the continued existence of our Fish River and Mpekweni properties.
"We believe that sustained tourism employment in these rural areas is of critical concern and
social importance to the province as well."
However, during the past 15 months SI and the ECDC have been locked in a legal wrangle over the
non-payment of rental by the casino and hotel group for Mpekweni.
The Bisho High Court earlier declared valid a moratorium agreement which effectively absolves SI
from paying rent for the Mpekweni Sun until at least 2008.
SI stopped paying rental in 1993, after the group negotiated a rent moratorium with the ECDC's
predecessor, the Ciskei People's Development Bank.
The moratorium in effect allowed SI to stop paying rent "until Mpekweni's financial performance
and viability improves", or until the lease expires in 2008.
The ECDC argued that the moratorium was not binding, as the signatory, MJ Sondiyazi -- a former
Ciskei People's Development Bank director -- was not properly authorised to grant such a concession.
The ECDC has appealed against the judgment by Judge Colin White, who rejected the corporation's
argument.
The parties have been trying to resolve the issue in recent behind-the-scenes negotiations between
ECDC executives and SI's John Lee.
The ECDC is keen for SI to relinquish its first refusal on all third party offers on the property
but the ultimate decision lies with the gambling board, which has to reconsider the suspensive
licence conditions which it has attached to SI's successful bid for the Boardwalk casino.
Both parties would welcome a decision by the board to relinquish SI from the conditions.
The ECDC receives no rental for its property and cannot consider any offers to purchase by third
parties until such time the board has positively reacted to SI's application.


Publisher: Dispatch
Source: Dispatch

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