Tsogo Sun swaps hotels for higher Hospitality Property Fund stake
JOHANNESBURG - South Africa's Tsogo Sun Holdings has sold 29 hotels to Hospitality Property Fund for a R3.6 billion ($268 million) mix of cash and shares, the companies said on Thursday.
The transaction is part of Tsogo's strategy to lessen its direct exposure to the hotel business and focus more on entertainment and gambling.
"The transaction represents an attractive acquisition for Hospitality, with the Tsogo portfolio comprising 29 successful and established hotel properties," Hospitality said.
Hospitality will issue 174 million shares to Tsogo and pay it R1 billion cash, the companies said.
Tsogo, which already holds 50.6% in Hospitality, said it will use the cash to pay down debt.
The companies did not disclose what the size of Tsogo's stake will be after the deal.
Tsogo told Reuters in March that it was mulling an increase in its Hospitality Property Fund stake to 60% by exchanging hotels for equity.
With Tsogo as its majority shareholder, Hospitality's board has proposed that the firm change its name to "Tsogo Sun Property Fund Limited" with the share code "TSP", the companies said.
($1 = R13.4337)