Betfred Proposes to Buy South African Horse Racing Company Phumelela

A British wagering firm, Betfred, has submitted a proposal to buy South African horse racing company Phumelela for a price range of 8.75 billion to 9.25 billion rand (roughly £39.6 million to £41.9 million / €44.2 million to €46.7 million / $52.1 million to $55 million).

This potential purchase would act as an alternative to Phumelela’s existing business rescue strategy, which involves the sale of their horse racing operations and other assets to Mary Oppenheimer Daughters, the organization managed by the family of the late industrialist Harry Oppenheimer.

The business rescue strategy is a form of financial protection in South Africa, implemented after the COVID-19 pandemic caused Phumelela to face significant financial challenges.

Betfred stated that their plan, which involves acquiring the entirety of Phumelela’s operations, would “ensure all creditors receive 100% of their claims,” unlike the business rescue strategy, which would see some creditors receiving only 72% of their owed funds.

The offer includes an initial payment of 8.75 billion rand and a conditional, delayed payment of 500 million rand, which must be accepted or rejected by September 1st, although Betfred retains the right to extend the deadline.

That particular day, Phumelela’s lenders will convene to deliberate on the takeover proposition.

Should the acquisition be successful, Betfred will provide Phumelela with 650 million rand to aid in settling its liabilities. This financial assistance will be disbursed in two installments, with the subsequent payment due by November 15, 2020, exceeding a year earlier than Mary Oppenheimer Daughters’ plan to settle the final of its three installments to creditors.

Betfred also pledged that all enterprises and positions would be safeguarded in the potential acquisition, and that all of Phumelela’s assets would be preserved “for the benefit of South African horse racing and gambling.”

The firm further stated that its “global expertise and unmatched track record,” such as its history of operating the UK Tote from 2011 to 2019, would contribute to enhancing the viability of South African horse racing.

Betfred remarked: “In a challenging global and domestic economic climate, the proposal reflects confidence in the South African economy, a direct response to President Ramaphosa’s initiative to expand the South African economy, with an objective of attracting $100 billion in foreign investment by 2023.” “Moreover, as previously mentioned, investment in South Africa by an experienced multinational company could lead to increased economic growth and opportunities in South Africa, as well as the transmission of skills and knowledge to local employees.”

This venture isn’t just beneficial for Phumelela’s creditors and shareholders, but also for the equestrian sport and wagering sector and South Africa in general.

Betfred states they aim to elevate South African horse racing’s global prominence by collaborating with partners in the UK, Australia, and forging new alliances in Europe, Asia, and the US.

They declared, “This will be a significant transformation for South African horse racing as we’ll employ astute marketing strategies, enhance user engagement, and foster worldwide appeal.”

Betfred disclosed their initial bid to acquire Phumelela in July, having previously attempted a takeover on three occasions. Their latest proposal, they believe, addresses all prior concerns.

The agreement values Phumelela’s equestrian racing assets at 3.25 billion rand, Phumelela Gold International, a joint venture between Phumelela and Gold Circle, at 3.3 billion rand, and Betting World at 2.2 billion rand.

Betfred financed the transaction with approximately 7.14 billion rand worth of 20 million William Hill shares, as of August 25, 2023.