Phumelela gets huge new backing from the Oppenheimer family (again) – Daily Maverick

Phumelela gets huge new backing from the Oppenheimer family (again) – Daily Maverick


The R550m funding from the Oppenheimer family will ensure that the operations of Phumelela Gaming & Leisure will continue while the company is being restructured and the sale of the horse racing and betting businesses is concluded. (Illustrative image | source: Unsplash / Keith Luke)

The office of Mary Oppenheimer Daughters, which is linked to the affluent Oppenheimer family, has agreed to provide Phumelela Gaming & Leisure additional funding worth R550m to save the company from collapse. This is over and above the R100m that the family has committed to SA’s largest horse racing and betting group.

The Oppenheimer family is prepared to throw another multimillion-rand lifeline to Phumelela Gaming & Leisure to keep SA’s largest horse racing group up and running under a business rescue process, while it raises money through the sale of its assets.

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The office of Mary Oppenheimer Daughters, which is linked to the affluent Oppenheimer family, has agreed to provide Phumelela Gaming & Leisure additional funding worth R550-million to save the company from collapse, it emerged from a published business rescue plan.

The Phumelela Gaming & Leisure business rescue practitioner, John Evans, published a business rescue plan on Wednesday 19 August, which proposes the sale of its horse racing business (including racing tracks and training centres in Gauteng, Northern Cape, and Port Elizabeth), a 50% share in Premier Gateway International (a totalisator business in the Isle of Man), and potentially, Betting World businesses (involved in betting on sports including soccer, rugby, and cricket).

The horse racing business will be up for sale, which might see Phumelela Gaming & Leisure give up ownership of the Turffontein Racecourse in Johannesburg, the Vaal Racecourse in Vereeniging, the Flamingo Park in Kimberley, and the Fairview Racecourse in Port Elizabeth.

Evans believes that the sale of these racecourses and other businesses will result in the best outcome for creditors, who claim they are owed R1.17-billion by Phumelela Gaming & Leisure, and will save jobs at the company, which employs 2,050 workers.

The company has not embarked on a process to retrench workers, but since the start of the lockdown in March, it has furloughed about 85% of its workforce. Furlough is a labour mechanism through which financially distressed companies temporarily lay off workers to save costs – similar to the no work, no pay principle.

The business rescue plan will be approved or rejected by creditors through a vote at a meeting scheduled for 1 September. The approval of the plan will result in Evans proceeding to work on the sale of the horse racing business and others, and ultimately, handing over a restructured business to the board and management of Phumelela Gaming & Leisure.

How Oppenheimer family funding will help the company

The funding (worth R550-million) from the Oppenheimer family, which is called post-commencement finance (PCF), will ensure that the operations of Phumelela Gaming & Leisure are kept going while the company is being restructured, and the sale of the horse racing and betting businesses is concluded.

PCF enables a company that is in the throes of a business rescue process to continue operating while its operations are being restructured. It also helps a company avoid the worst-case scenario of liquidation, which implies its death.

The latest funding allocated by the Oppenheimers is over and above the R100-million that the family injected into Phumelela Gaming & Leisure when it voluntarily submitted itself for business rescue in May. At the time, Phumelela Gaming & Leisure took the business rescue route because it was facing financial pressures and was not generating revenue after a nationwide lockdown suspended activities in the horse racing industry.

Of the R100-million, Evans and his team have used only R60-million to fund the operations of Phumelela Gaming & Leisure during its business rescue process.  

“The balance [of the funding] remains available to the company and if the business rescue plan is adopted will likely be drawn down to fund operations whilst the sale transactions [of Phumelela Gaming & Leisure] are implemented,” the business rescue plan reads.

The additional money from the Oppenheimer family will ensure that Phumelela Gaming & Leisure not only pays creditors from the funding itself, but also from the revenue generated independently by the company from its operations. The business rescue plan proposes that creditors should be paid between 72 cents and 100 cents in the rand, depending on whether their claim is secured (money that is owed is backed by Phumelela Gaming & Leisure assets as a guarantee for repayment). 

Among the creditors that stand to get their monies owed in full – if the business rescue plan is approved – are financial institutions RMB and Investec, Phumelela Gaming & Leisure workers (owed full salaries), and Mary Oppenheimer Daughters. BM/DM

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