R320m Kerzner deal forces Kersaf to sell double its shares

Johannesburg - Leisure group Kersaf Investments had more than doubled the number of shares it was obligated to sell in Kerzner International to fund a R320 million settlement agreement reached with Sol Kerzner's New York-listed hotel empire.

The settlement agreement brings to an end a $75 million lawsuit Kerzner brought against Kersaf last year for alleged breach of contract.

It also paves the way for a major restructuring of Kersaf to unlock shareholder value and simplify the group's structure.

Part of the proceeds from the sale of up to 4.025 million Kerzner International shares, which is more than 30 percent of the market capitalisation of Kersaf, would be used by Kersaf to acquire the remaining 26.7 percent of the shares it did not already own in Sun International Management.

The sale could raise $87.5 million, which when subtracted from the $32 million settlement and the $9 million in cash Kersaf would pay for Sun International Management, would leave $46.5 million that could be distributed to Kersaf shareholders, an analyst said.

Kersaf was meant to dispose of 2 million shares in terms of an agreement with Kerzner in July last year following the dismantling of the Sun International Investments shareholding structure in Sun International Hotels, which has since been renamed Kerzner International.

Kersaf would then be left with about 900 000 Kerzner International shares should the market buy all of the allotted 4.025 million shares through a public offering by no later than February 28, Buddy Hawton, the executive chairman of Kersaf, said yesterday.

"The disposal of the shares allows us to move out of a passive investment and into our core business. We did not participate in the management of Kerzner International and had no voting rights although we held 40 percent of the group's net asset value with our shares"

Kersaf closed 1c higher at R26.01 in Johannesburg yesterday.