Tsogo Sun Holdings completes unbundling of hotel division on the JSE

Tsogo Sun Hotels' listing represents an exciting new era for stakeholders, says CEO Marcel von Aulock.

Tsogo Sun Holdings has completed the unbundling of its hotel division on the JSE, achieving a long-stated goal by the company's management to separately list its hotel and casino assets. 

On 12 June 2019, Tsogo Sun Hotels made its debut on the JSE at R2.70 a share. However, the new company attracted more investors as its shares finished 48 percent higher to R4 on the day. The shares extended their rally on Thursday as they rose as high as R4.49, valuing the company at R4.2 billion. 

After the unbundling, Tsogo Sun Holdings now houses casino assets while Tsogo Sun Hotels houses hotel assets. The latter owns and operates a portfolio of 110 hotels that includes top-rated hotels such as Monte Casino in Johannesburg.

Tsogo Sun Holdings shares fell 18.9 percent on Wednesday and extended losses on Thursday. This is normal because during an unbundling process, value would be split and transferred from a parent entity to a newly formed one.

Earlier this year, Tsogo Sun Holdings said its casino and hotel divisions operated in different markets and services different customers, thus warranting the unbundling.  “There are limited opportunities to leverage synergies within the group as a whole,'' the company said at the time about separately listing its casino and hotel assets. 

The rationale behind the unbundling is to give shareholders a greater investment choice and the ability to manage their exposure to separate casino and hotel operations. 

The separate listing will also provide shareholders with transparent disclosure relating to the operation of the hotel division  — allowing the valuation of Tsogo Sun Hotels to be determined without discounting for gaming-related regulatory risks. 

Tsogo Sun Hotel chief executive Marcel von Aulock said the listing presented an “exciting new era” for all of our stakeholders, from shareholders to employees. “We look forward to continuing to serve our guests with the dedication and excellence that they have come to expect from a company such as ours,” he said. 

The separate listing of the hotel and casino assets was long stated by Tsogo Sun Holdings as far as three years ago. 

In November 2018, Tsogo Sun Holdings called off its plans to sell its seven casino and hotel properties to real estate group Hospitality Property Fund due to the lack of support from shareholders. The deal was worth R23 billion. 

Tsogo Sun’s long-stated mission was to spin off all of its hotel and casino properties into Hospitality Property Fund, a separately JSE-listed company. But the canned deal with Hospitality Property Fund meant that Tsogo Sun’s ambition would be further delayed.