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Are You A Bull Or A Bear?

Phumelela Shares Up For Grabs

RA CEO Larry Wainstein

In a letter dated 11 July 2017, Larry Wainstein, in his capacity as CEO of the Racing Association, issued an offer to qualifying members of the RA to purchase Phumelela shares.

The Racing Association has subscribed for listed securities in Phumelela Gaming & Leisure Limited for allocation to its members which it is making available to “all members in good standing at 31 May 2017,”  at the “discounted price” of R17.39 per share.  For full details, interested parties are asked to contact Natalie Turner by email at [email protected] by no later than 17:00 on 20 July 2017).

The RA will be holding a series of information sessions at Turffontein, Fairview and Kenilworth for interested parties to raise any questions or request information relating to the offer.

Information sessions are scheduled as follows:-

  • 17 July 2017 at Turffontein’s 3rd Floor Hawaii Room starting at 18h00
  • 18 July 2017 at Fairview’s 1st Floor Member’s Facility starting at 18h00
  • 19 July 2017 at Kenilworth’s Paddock Room starting at 18h00

Anyone interested in attending is requested to RSVP by email to [email protected] by Friday, 14th July 2017



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7 comments on “Are You A Bull Or A Bear?”

  1. These basic questions need answers but we all know that none will ever be given

    1. Why did the RA decide to buy Phumela shares?

    2. What benefit does the RA get from the deal with Phumelela since it is selling the shares to RA members for no profit?

    3. It has been reported that Phumelela has had one of its worst years and is retrenching staff so why would the deal be done?

    4. Was Phumelela in an illiquid financial state when the deal with the RA was done? If it did not need the money, please can someone explain in plain English why it would sell its shares at a price less than the average daily price over the past year?

    5. The RA and its Members who buy the shares cannot sell them for a year. Why did the RA agree to this because shares bought on the JSE can be sold on the day that they are bought?

    6. Who approached who to do this deal?

    7. Were any commissions paid to directors, family, friends or acquaintances for getting the deal done?

    8. Will the RA ever disclose which members bought the shares because of the offer?

    9. If I am a RA member that has taken up shares at the price, how will I know what shares have not been taken up and how many of these shares I would be able to buy? How will I ever know that this whole process has been done correctly ?

    10. Why did the RA buy the shares from Phumelela when it could have done a deal that members buy the shares directly from Phumelela and not via the RA?

    11. A few days ago two Phumelela directors each sold about R3,000 000.00 of their Phumelela shares ostensibly to pay for tax obligations coming up. When you consider what they earn every year you would ask yourself why they each need to pay R6,000 000.00 in personal income tax to SARS. The reasons given to the JSE do not add up. Knowledge of poor performance makes more sense. Any comments?

    1. to answer 11. it is common practise, when share options vest, to sell a number of shares to settle the taxation obligation on the share options. a tax obligation arises if the share price at vesting time exceeds the share price at the time of granting the options.

  2. “The creatures outside looked from pig to man, and from man to pig, and from pig to man again; but already it was impossible to say which was which.”

  3. To me, it is apparent from the report below that the RA is financing the business of Phumelela. This was published in the BUSINESS REPORT on 11 January 2017.

    I was asked whether the transaction is in reality a sophisticated loan by the RA to Phumelela. My answer was that on face of it, it does not appear so but only an investigation and deconstruction of all the facts, will provide the answer.

    Phumelela in R284m Right s Offer.

    Johannesburg – Horse racing and betting group Phumelela Gaming and Leisure intends to raise R284 million through an offer of 16.3 million shares at R17.39 a share to partly finance its 50 percent stake in fixed odds sports betting operator, Supabets, the company said on Tuesday.

    The R17.39 a share offer represents a 21.3 percent discount to the closing price on Monday, Phumelela said. Phumelela announced its intention to acquire the Supabets stake in December 2015.

    Supabets offers sports betting, virtual sports betting and limited payout machines. It has a branch network across South Africa.

    Phumelela said its shareholders had already approved the acquisition of the 50 percent stake in Supabets and the rights offer.

    The deal, worth R437 million, is expected to boost Phumelela’s earnings per share. The purchase price is based on Supabets’s generated net profit after tax for the financial year ended February 29 last year of R94.5 million.

    Supabets’s net profit for the same period was initially estimated at R102 million.

    Phumelela, the Anastassopoulos family (Supabets’ controlling shareholder) and KPMG had to agree on Supabets’ profit.

    Read also: Phumelela beats the odds

    Phumelela has waxed lyrical about Supabets.

    “The Anastassopoulos family has revolutionised sports betting in South Africa. The transaction represents a unique opportunity for Phumelela to invest in an industry-leading business with an innovative and entrepreneurial management team that furthers various strategic objectives and will add value to Phumelela as a whole

    “Supabets is a market leader in betting on sports other than horse racing, and Phumelela is the market leader in betting on horse racing. The opportunity to share knowledge, technology and product and industry best practice is attractive to both Phumelela and the Anastassopoulos family.” The company said it would leverage off Supabets’ business model and management team to enhance and add critical scale and mass to its existing Betting World operations.

    Betting World, Phumelela’s wholly owned corporate fixed-odds operator, has nearly 70 retail outlets and an online betting site as well as a telephone betting centre. Phumelela said the deal positioned it for further growth.

    In details issued after the initial announcement of the deal, Phumelela said 35 percent of the R437 million would be settled through the issue of new Phumelela ordinary shares, while 65 percent would be in cash.

    The cash portion would be financed through the issue of new Phumelela ordinary shares by way of the rights and any remaining balance will be settled through debt.

    Phumelela’s share price on the JSE was on Tuesday was unchanged at R22.10 a share.

  4. this looks to me like a simple rights issue. cant see anything sinister at all . pum want to buy supabets and are raising capital to do so.

  5. seriously this is how stock markets work. listed companies will offer to issue new shares to interested investors to raise capital for various reasons.

    1. ive had a look at this. the rights issue was significantly over subscribed the r a would have recieved a significant allocation. the only question that arises to my mind is whether the r a is allowed to pass a portion of their allocation onto their members as by doing so they are diluting their shareholding which may may contravene the original founding agreement. not having access to that i cant answer the question.

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