Phumelela Gaming & Leisure, South African race and sports betting operator, has applied for a form of bankruptcy protection since the pandemic forced the already teetering business over a financial cliff.
Last Friday, Phumelela’s board of directors warned investors that it had suspended trading in its Johannesburg Stock Exchange shares and considered “the best option to ensure the long-term survival of the company and the sport of horseracing is to implement a business rescue plan.” Business rescue helps companies struggling to temporarily relieve their creditors in order to provide a company with timeliness to do so. Phumelela said it named a Mr. John Evans as its rescue practitioner for business.
Phumelela is coming off the “worst year” in its 22-year history following regulatory changes in the province of Gauteng which removed the company’s share of the mandatory 6 percent levy imposed on the winnings of racing betters. This was further compounded by the recent suspension of all South African races due to the COVID-19 pandemic, which prompted Phumelela to alert last month that under current circumstances it could not go on much longer.
However, the announcement of Phumelela’s market review suggested that it was holding “ongoing negotiations with a third party on the provision of loan financing,” and that it had “received a signed proposal” from the unspecified third party.
South African media later reported that the white knight of Phumelela was Mary Oppenheimer Daughters, a firm owned by the wealthiest family in the country. According to Mary Oppenheimer Daughters board member Wehann Smith, the group has reportedly agreed to provide a R100 m (US$ 5.4 m) lifeline which should give Phumelela “safe space for about six months or so.”
Smith claimed that the R100 m lifeline was “not an attempt to save Phumelela as a company or to invest in Phumelela,” but was intended to ensure “the sustainability of the [racing] industry as a whole.” The Oppenheimer family has a long-standing link with the racing sector in South Africa, having bred and owned several top-performing horses. Mary Oppenheimer Daughters previously donated R1b to the Solidarity Fund of South Africa to assist the country’s battle campaign COVID-19.