South African horse racing operator Phumelela Gaming and Leisure Group will delist from the Johannesburg Stock Exchange (JSE) in early 2021 as the company is broken up to repay creditors.
The heritage racing operator has faced financial difficulties for a number of months, following the forced closure of its racetrack venues due to South African coronavirus restrictions in May.
Johannesburg’s High Court had placed Phumelela assets under bankruptcy protection, allowing the company to seek investors to avoid outright liquidation – a decision that saw Betfred‘s owner Fred Done bid for the firm’s distressed assets.
Rejecting external funding, the board of directors introduced a ‘business rescue’ plan, suspending the trading of its shares on the JSE, as it sought to save the company from bankruptcy.
The rescue plan will therefore mean that all of Phumelela’s assets will be put up for sale, with the funds generated being used to repay creditors. This measure has been described as ‘an orderly winding up’ of business operations, which will eventually leave Phumelela with ‘no business, no assets and no employees’.
Following Phumelela’s decision to implement its business rescue plan, Chief Executive John Stuart and Financial Director Andreas Heide stepped down from their positions. Although an interim financial director has been appointed, Phumelela stated that these positions will not be permanently filled.
In a statement, Phumelela explained: “Management control of the Company vests with the business rescue practitioner and the board of directors are unable to fulfil their role as envisaged in the JSE Listings Requirements.
“Phumelela therefore does not meet certain of the minimum Main Board listing criteria, including, inter alia, the financial requirements pertaining to assets and profitability and the ability of the Issuer to control its assets and affairs or to determine its future.
“The Business Rescue Plan records that a future forecast is not included in the Business Rescue Plan as Phumelela will not, once its assets have been sold or realised, trade in the future.”