SUN DIMS ON GAMING GROUP
Twilight for Sun International?
The company is drowning in debt as its new flagship casino in Pretoria fails to deliver the goods
Behind the glitz and glamour of Sun International’s casinos and posh hotels lies the rather apocalyptic truth of dire financial pressure. The company ended its half-year to June with a balance sheet weighed down by debt of R15.1bn — R11.46bn related to its SA operations and the balance of R3.64bn to its casino and hotel interests in Latin America. It doesn’t end there. Its interest bill, which came in at R592m in the latest six months, was up R207m from R385m in the corresponding 2016 period.And this is the crux of it: Sun International’s heavy debt burden means it’s breached its debt covenants in SA in its latest reporting period. Covenants have since been renegotiated with banks, with debt to earnings before interest, tax, depreciation and amortisation (Ebitda) standing at 3.9, just below the maximum covenant level of four, but Sun International is in an incredibly precarious situation. "Sun International needs to be recapitalised," says Warren Jervis of Old Mutual Investment Grou...
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