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The cost of the merger of two important South African operators could be the Silverstar Casino, if the authorities are not convinced that competition with the relatively close Montecasino resort would be impaired.


Gold Reef and Tsogo Sun want to retain ownership of Silverstar Casino


Tsogo Sun & Gold Reef merger decision likely in February


decisiontime SOUTH AFRICA


The Competition Commis- sion in South Africa, which is considering whether operators Tsogo Sun and Gold Reef can merge without having to sell off the Silverstar Casino in Gauteng province,


has


extended its hearing into January and February 2011. The Commission tri-


bunal’s proceedings were due to be completed in the five days up to December 10, however, extra dates on January 13 and 14 have been called with legal argu- ments being pushed to Feb- ruary 9.


This means that a year at least will have passed since the proposed merger was announced before it gains all the necessary approvals


to go ahead. With almost all the relevant Provincial gaming boards having given the deal the nod, the last major hurdle is the tribunal. In its original assessment, the Competition Commis- sion said that while the merger presents no signifi- cant concerns in the rest of South Africa, it could lessen competition within the Gauteng market. Silverstar Casino, operated by Gold Reef, offers a competitive alternative to Montecasino, operated by Tsogo Sun and the merger would lead to the elimination of Silverstar as a competitor, providing an incentive to raise prices or reduce the product offering.


The merging companies,


however, believe that each casino draws from its own catchment area and does


not compete with the other. Tsogo Sun’s representatives told the hearing that casinos in Gauteng competed with other leisure options such as restaurants and cinemas and that in any case compe- tition between casinos was strongly regulated with casinos serving specific geographical parts of the province. Jerome Wilson, the


lawyer for Tsogo Sun, said that those with a weak propensity to gamble could be tempted away by other leisure options while more dedicated gamblers were already less likely to switch from the casino closest to them. He said: “While these players may travel to another casino, the distance between them may be an impediment to switching.” Silverstar and Monte-


casino are 25km apart as the crow flies and 30km by the best roads. Good news for the


merger partners was that there was no objection from their main commercial com- petition, South Africa’s largest operator, Sun Inter- national. The first witness at the hearing, Tristan Kaatze, head of the Sun’s northern gaming operations, said: “Sun does not expect any major competition in Gauteng or in any other province resulting from the merger of Tsogo Sun and Gold Reef.” However, Leo Kok of


Peermont Global said that his company’s Emperors Palace Casino, to the east of Johannesburg, had been sig- nificantly affected by the opening of Silverstar in 2008.


Peermont awarded Limpopo licence


nosurprises SOUTH AFRICA


The Limpopo Gambling Board has awarded the last remaining casino licence in South Africa’s north-eastern province to Peermont Global.


The company will build a


resort in Burgersfort, 40km south of the Mafefe Nature Reserve and not far from the


Kruger National Park. In addition to a casino with 150 slot machines and eight tables, it will boast a 40- room Peermont Metcourt three-star hotel, a 130-seat conference facility, a restau- rant, showbar and enter- tainment facilities for teens and children.


In a statement the company said: “The resort is to be constructed at an


estimated total cost of R236m (E25.9m), of which R24m (E2.6m) has already been spent on land and bid applications costs, leaving R212m (E23.3m) to be spent.”


It continued: “Funding of


the project is expected to be in the form of a R90m (E9.9m) senior project debt facility, R50m (E5.5m) raised as subordinated mezzanine


funding and the balance in the form of shareholder loans and equity.”


Peermont was one of two companies to bid for the licence, however, the other applicant’s proposal was disqualified at an earlier stage, leaving Peermont as sole bidder. It must still now negotiate the terms and conditions of the licence with the Gambling Board.


January 2011 • africa&middleeastnews 15 AFRICA & MIDDLE EAST


Hemingways The Mall at Hemingways Casino in the Eastern Cape province of South Africa saw ten new retail outlets opening in time for the Christmas season. Tsogo Sun has regained the Hemingways licence for another 15 years from next November and will invest around R400m (E44m) in the site.


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