A powerful new generation South African horseracing operator could become a reality after it emerged today that the Gold Circle Board has approved a financial proposal from leading betting operator Hollywoodbets and Greg Bortz.
Earlier this week the Sporting Post reported the Competition Commission’s approval of Hollywood Sportsbook Holdings (Pty) Ltd acquisition of Kenilworth Racing (Pty) Ltd.
This was a sequel to agreements concluded in a R330 million deal in July 2022 at a time when Kenilworth Racing was under severe financial duress.
The deal has ensured the long-term viability and health of racing in the Western Cape for the years and decades ahead as well as ensuring that thousands of jobs in and around the horseracing industry are maintained and secured.
A successful entrepreneur and racehorse owner, Greg Bortz of GMB Investments (Pty) Ltd was a key player in the transaction and is set to partner Hollywoodbets into the future.
Now the same team looks set to come to the rescue of an ailing Gold Circle, which saw their six-month trading results for the period ended 31 January 2023 reflect a deficit of R25.7 million.
Projecting this to the financial year ending 31 July 2023, Gold Circle report that this deficit is now expected to increase to R45 million.
Continuing declining trading trends have thus forced the Gold Circle board to a point where decisions on the future sustainability of the company need to be taken.
Extrapolating the projected current deficit for the period through to July 2027, the aggregated losses would reportedly amount to R452 million.
Gold Circle clearly does not have a sustainable future with the present business model.
This projection to July 2027 includes receipt of the revenue being generated from the 3% bookmakers tax revenue. Should the Provincial Authorities take a decision to abandon this income stream to Gold Circle, the accumulated losses to 2027 will increase from R452 million to R598 million.
On 06 April 2023 the Gold Circle Board received a joint Letter of Intent from Hollywoodbets and Greg Bortz, putting forward a financial proposal for consideration.
Gold Circle advise that the conditions of the Letter of Intent have been fully assessed through a Restructure Committee who have made recommendations.
The Gold Circle Board met on 20 April 2023 to consider the Letter of Intent in more detail and to assess whether there was any merit in progressing the proposal, and what impact it would have on all stakeholders, including local and provincial authorities.
In reviewing the proposal, the Board took note of the 2023 to 2027 extrapolated projections.
The full Board of Directors unanimously approved the proposal and the changes that emanated from the Restructure Committee.
The Board has resolved to recommend the proposal to Club Members at a meeting to be convened in due course should the proposers be satisfied with their due diligence process.
Hollywoodbets and Bortz have been afforded a three-month exclusive due diligence period.
The Gold Circle Board state that they are hopeful that in the short-term they will give Notice to Members regarding a Special General Meeting (SGM), seeking approval of the Hollywood/Bortz transaction, which by that time will have the final approval of the Directors and their recommendation for member acceptance.
At the same SGM, members will be requested to approve access to necessary funds (from the ringfenced Clairwood Funds) to bridge the company’s cashflow needs to enable a continuation of operations pending the finalisation of the Hollywood/Bortz transaction.
With the inclusion of the ring-fenced funds available from the Clairwood sale, Gold Circle apparently has reserves that will sustain the present business for an approximate period of only 18 months.
The Board indicates that in the light of the continuing losses being incurred, it will be necessary for Members to authorise periodic drawdowns on the cash reserves to keep the business going in the short-term.
- Photographs for illustration only – kind courtesy Candiese Lenferna and Gold Circle.
