Phumelela in R284m rights offer

Johannesburg – Horse racing and betting group Phumelela

Gaming and Leisure intends to raise R284 million through an offer of 16.3 million

shares at R17.39 a share to partly finance its 50 percent stake in fixed odds

sports betting operator, Supabets, the company said on Tuesday.

The R17.39 a share offer represents a 21.3 percent

discount to the closing price on Monday, Phumelela said. Phumelela announced

its intention to acquire the Supabets stake in December 2015.

Supabets offers sports betting, virtual sports betting

and limited payout machines. It has a branch network across South Africa.

Phumelela said its shareholders had already approved the

acquisition of the 50 percent stake in Supabets and the rights offer.

The deal, worth R437 million, is expected to boost

Phumelela’s earnings per share. The purchase price is based on Supabets’s

generated net profit after tax for the financial year ended February 29 last

year of R94.5 million.

Supabets’s net profit for the same period was initially

estimated at R102 million.

Phumelela, the Anastassopoulos family (Supabets’ controlling

shareholder) and KPMG had to agree on Supabets' profit.

Read also:  Phumelela beats the odds

Phumelela has waxed lyrical about Supabets.

“The Anastassopoulos family has revolutionised sports

betting in South Africa. The transaction represents a unique opportunity for

Phumelela to invest in an industry-leading business with an innovative and

entrepreneurial management team that furthers various strategic objectives and

will add value to Phumelela as a whole

“Supabets is a market leader in betting on sports other

than horse racing, and Phumelela is the market leader in betting on horse

racing. The opportunity to share knowledge, technology and product and industry

best practice is attractive to both Phumelela and the Anastassopoulos

family." The company said it would leverage off Supabets’ business model

and management team to enhance and add critical scale and mass to its existing

Betting World operations.

Betting World, Phumelela’s wholly owned corporate

fixed-odds operator, has nearly 70 retail outlets and an online betting site as

well as a telephone betting centre. Phumelela said the deal positioned it for

further growth.

In details issued after the initial announcement of the

deal, Phumelela said 35 percent of the R437 million would be settled through

the issue of new Phumelela ordinary shares, while 65 percent would be in cash.

The cash portion would be financed through the issue of

new Phumelela ordinary shares by way of the rights and any remaining balance

will be settled through debt.

Phumelela’s share price on the JSE was on Tuesday was

unchanged at R22.10 a share.

BUSINESS REPORT