Real Africa Holdings (RAH) has again rejected Sun International's offer of R5,30 a share for the investment group, saying on Tuesday that it was "neither fair nor reasonable", based on the opinions of RAH's independent subcommittee and external opinion provided by Standard Bank.

Sun International's bid closes this Friday.

Last week it said it controlled about 55% of RAH's shares.

In a Sens statement, RAH said Standard Bank-led external opinion put RAH's value at R6,40 a share, following the payment of a special dividend of 77c.

RAH director Danie Vlok said the group had always felt the offer was not fair, based on external valuations mandated by the Securities Regulation Panel.

Sun International CEO David Coutts-Trotter said the group accepted the RAH board's right to have a view on the valuation.

However, "they continue to try and infer value which we believe isn't there. We have responded comprehensively to their valuation. These include using discount rates which do not take adequate risk into account nor factor in recent increases in interest rates; and using a dividend yield in valuing the holdings in management companies that distribute 100% of their profits when an earnings yield valuation would be more appropriate.

"They (RAH) also have not taken into account that these contracts expire and revenue does not continue indefinitely.

"Other things they have not considered include the lack of accounting for ongoing listing and corporate costs (R11,8m for the year to end-March, and R23m for the prior year, resulting in a value of an estimated R125m for this year); and overstating new expansion projects at Sun International of which GrandWest is the only material one to the valuation," Coutts-Trotter said.

At RAH's annual general meeting, scheduled for next Monday, Sun International wants to remove all the directors at the group, to be replaced by its nominated directors.

Sun International's board nominees to the board are Coutts-Trotter, chief financial officer Rob Becker, chairman Derek Hawton and director Valli Moosa.

Vlok would not share his thoughts on the move, saying only that RAH wanted to release a Sens statement telling shareholders where the process was.

When Sun International initially bid for RAH, the group said it intended to delist the firm when it reached 90% control.

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