Betfred Loses Phumelela Bid
September 04, 2020
According to several news stories published by prominent South African racing news pages, Betfred failed to acquire the bankrupt heritage wagering operator due to Phumelela’s business rescue / bankruptcy auditor having refused to review the UK operator’s ZAR 900 million (£40,512,766) counteroffer. The counteroffer, which was made by Betfred at the end of August, and though larger than any other offer proposed at the time, was according to said auditor not the preferred offer on the table.
More Money - But On Condition
In fact, the rescue package put to table by the UK bookmaking giant represented an offer nearly double the value of the only other alternative proposal on the table, being that of the ZAR 500 million acquisition price offered by private investment fund Mary Oppenheimer Daughters (MOD). Said private investment fund belongs to two of the members of South Africa’s wealthiest mining family, namely Mary Oppenheimer-Slack and daughter Jessica Jell.
Betfred’s offer reportedly entailed settling Phumelela’s ZAR 677 million in debt with immediate effect as well as a holding on to the firm’s entire staff portfolio. The rescue deal reportedly also involved a complete racetrack overhaul and the incorporation of the bankrupt racetrack’s properties into Betfred’s own Tote wagering portfolio.
Phumelela’s bankruptcy auditor however closed all hearings earlier on this week, after which it proceeded to declare the Oppenheimer family-owned MOD investment fund to be the winning bidder to acquire the legendary racetrack portfolio. Said auditor at the same time also declared a postponement in terms whereof all further investment opportunities were effectively put on hold.
Betfred Offer Wasn’t Final
As for the reason behind the denial in terms of Betfred’s significantly larger offer, the auditor explained that unlike MOD’s offer, which had been legal and binding and subsequently laid before creditors and shareholders for unanimous approval, Betfred’s offer had erred on the side of the preliminary.
Significant to note is that mentioned MOD fund is an officially registered creditor to the in-trouble Phumelela. The fund had toward the beginning of the year issued Phumelela with a ZAR 100 million loan.
According to the now-accepted rescue plan on the table from the Oppenheimers, the family will pay an amount of ZAR 480 million in return for a right to full ownership of Phumelela’s racetrack as well as its broadcasting properties and assets. This also means that the deal involves the separation of the racetrack’s actual assets from its leisure and property holdings.
In addition to the actual purchase price paid for the track and accompanying broadcast properties and assets, MOD has reportedly agreed to launch a so-called “post conflict fund” to the value of an additional ZAR 550 million. This will guarantee a viable payment plan in favour of the racetrack’s existing creditors. Phumelela racetrack owes its creditors a combined sum of roughly ZAR 1.17 billion.
More Than Self-Preservation
Had Phumelela’s bankruptcy auditor elected to sell the racetrack and accompanying assets to Betfred, or in fact to any other interested party, MOD would have had to settle for a repayment totalling but a fraction of its own credit extended to Phumelela. A distribution to creditors would have had to take place, with Betfred’s reportedly tabled offer not nearly sufficient to cover a 100% distribution ratio as well as all other business rescue levies, costs of agreements, etc.
MOD has in the meantime declared the reason behind its interest in the bankrupt Phumelela as that of not only looking out for its own best interests, but also an attempt to safeguard South Africa’s racing industry.