In early 2021, South African horse racing company Phumelela Gaming and Leisure Group will be de-listed from the Johannesburg Stock Exchange (JSE) as the corporation is split to repay creditors.
For a number of months, following the forced closing of its racetrack venues due to South African coronavirus restrictions in May, the heritage racing operator has faced financial difficulties.
The High Court of Johannesburg put Phumelela assets under insolvency cover, allowing the company to pursue investors to escape direct liquidation, a decision that saw Fred Done, the owner of Betfred, bid for the distressed assets of the company.
The board of directors, refusing foreign support, launched a ‘business rescue’ scheme, halting the trading of its stock on the JSE, as it tried to save the business from bankruptcy.
Therefore the rescue plan would mean that all of the properties of Phumelela will be put up for sale, with the funds raised being used to repay creditors. This measure has been described as an ‘orderly winding up’ of company activities, which will ultimately leave Phumelela with no company, no assets and no staff.’
Chief Executive John Stuart and Financial Director Andreas Heide stepped down from their positions after Phumelela’s decision to adopt the business rescue plan. Although the appointment of an interim financial director was made, Phumelela confirmed that these roles would not be filled permanently.
Phumelela explained in a statement: “Management control of the Company vests with the business rescue practitioner and the board of directors are unable to fulfil their role as envisaged in the JSE Listings Requirements.
“Phumelela therefore does not meet certain of the minimum Main Board listing criteria, including, inter alia, the financial requirements pertaining to assets and profitability and the ability of the Issuer to control its assets and affairs or to determine its future.
“The Business Rescue Plan records that a future forecast is not included in the Business Rescue Plan as Phumelela will not, once its assets have been sold or realised, trade in the future.”