Shareholders in empowerment group Sancino Projects, which has an indirect interest in the profitable GrandWest Casino in Cape Town, are about to receive proposals to resolve the thorny issue of Sanlam's preference shareholding in their company.

Last week Sancino Projects published a notice to its shareholders advising they were about to receive an offer from Sanlam and should exercise caution in dealing in their shares.

Sancino Projects holds a 13% stake in Grand Parade Investments, the black empowerment group which, with Sun International, owns the GrandWest Casino and Table Bay Hotel.

GrandWest was one of the star performers in the Sun International portfolio in the year to June, with a 19% increase in gaming revenues to R1,2bn.

Grand Parade Investments said at the beginning of last month that it intended to list on the JSE shortly to make the shares more tradable.

The resolution of Sanlam's R24m worth of preference shares in Sancino Projects has been highlighted after listed empowerment company Cape Empowerment Trust (CET) made an offer to Sancino minority shareholders to acquire their shares. So far CET has received acceptances from more than 50% of Sancino minorities.

If Sanlam were to convert its preference shares in Sancino into ordinary shares, this would dilute CET's stake. It would also affect Sancino's empowerment status, which is particularly important for gambling companies.

Sancino Projects has not been able to service the preference shares because of property investments in the past few years that went awry.

Sanlam, through its development fund which supports black economic empowerment, acquired the preference shares in Sancino when it helped Sancino in its bid to take a stake in New Clicks and to buy commercial printing company Mills Litho.

Sanlam also owns a stake of about 8% in Cape Empowerment Trust.

Cobus Foster, a member of the Sanlam Private Equity team that manages its unlisted investments, said on Friday the two options were either to redeem or to convert the preference shares.

Business Day
Publisher: I-Net Bridge
Source: I-Net Bridge