Slack and co to Phumelela rescue

Mary Oppenheimer Daughters (MOD) looks likely to take over the horse racing interests of bankrupt Phumelela Gaming and Leisure – if creditors vote to accept a proposed business rescue plan.

If the plan gets the nod, MOD will put up R550 million in funding to keep the company afloat while its financial house is put in order and racing in SA is saved. Business rescue practitioner John Evans released his plan for SA’s biggest racing operator and betting company yesterday.

Evans calls for Phumelela to continue trading under rescue administration until at least 2022, while many of its component parts are sold off and creditors are paid out. The creditors will vote on the plan at a Zoom meeting on 1 September. They include banks and the SA Revenue Service (Sars), while assets to be sold off include shares in various bookmaker firms, real estate, licences and international broadcasting agreements.

In a 47-page document, Evans lays out an argument for adopting his plan rather than going for a liquidation of Phumelela.

“Creditors are presented with a plan that will … result in a better return and outcome for them than would be achieved were the company placed in liquidation.”

The estimated return to concurrent creditors in terms of the plan is between 72c and 100c in the rand, whereas liquidation would see them get 40c to 60c “and no surplus funds for the benefit of the company”.

Many of Phumelela’s 2,050 employees – some of whom are furloughed – are likely to keep their jobs, the document asserts. JSE-listed Phumelela runs racing in all regions, except KwaZulu-Natal and Western Cape, where Gold Circle and Kenilworth Racing hold sway. The document warns that the liquidation route “favours Sars only”.

However, if the receiver takes a longer view, it might realise that ongoing revenue from racing – not to mention the preservation of jobs – might be the wise course. MOD – a company of racing doyenne Mary Slack and her four daughters – provided R100 million in “post-commencement finance” to keep racing going following the collapse of Phumelela.

– news@citizen.co.za

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