A massive crowd on the premier raceday at Hollywoodbets Greyville (Pic – Candiese Lenferna)
While KZN racing operator Gold Circle is celebrating another successful Champions Season, which is set to reach a climax at Hollywoodbets Greyville on Sunday, the racing operator declared has declared in a letter to its members that it is under dire financial pressure and is forecasting a R100 million loss for the 2023/24 financial year.
But there is some light at the end of the tunnel in terms of a deal on the table to acquire the company.
The white knights are leading South African betting operator Hollywoodbets and horseracing’s 21st-century leading man, Cape Racing Chairman Greg Bortz.
Hollywoodbets, already a massive supporter of racing in KZN, has made an offer to acquire 100% of Gold Circle, which proposal has been accepted by the board. This offer is subject to the approval of Gold Circle’s members, the Competition Commission, and the KZN Gaming Board.
Capital City racing at Hollywoodbets Scottsville (Pic – Candiese Lenferna)
However, the ultimate conclusion of this transaction will take time – something Gold Circle does not have.
It seems that Bortz has stepped up to bridge the gap between the immediate cash needs and the ultimate sale of the company to Hollywoodbets.
He steps up with some life-giving cash flow through his investment firm GMB Investments (Pty) Ltd, which has made a proposal to loan Gold Circle R100 million to bridge them through the sale process to Hollywoodbets. The offer of this loan has been accepted by the board, and documentation is being drawn up.
Recently also appointed CEO of JSE listed Grand Parade Investments – a company of which he is a majority owner – Bortz could well ultimately complete the personal ‘holy trinity’ with the successful conclusion of the underlying transactions.
The passionate racing man also has an option to acquire 20% of Gold Circle from Hollywoodbets.
We would expect the popular and energetic entrepreneur to exercise the option, and it is incorporated in the proposal that he will take up the post of chairman of the company following the closure of the proposed deal.
Innovating and delivering some much-needed cash flow Greg Bortz (Pic – Troy Finch)
Currently a director of Gold Circle, Bortz will resign from the board upon formal acceptance of the loan agreement to avoid any actual or perceived conflict of interest.
In a letter to members on Tuesday 25 July, Gold Circle Chairperson Sadha Naidoo said that the most recent management financial statements presented to the Board of Directors estimate that the company will incur losses amounting to R65 million in the current financial year ended 31 July 2023, increasing to R100 million for the year ahead.
The theatre of champions – pumping on Saturday 1 July 2023! (Pic – Candiese Lenferna)
This projection has increased significantly from the last report to members mainly due to the failure by the KZN provincial fiscus to pay the 3% bookmakers’ tax contribution to the company in terms of current KZN tax legislation. The matter is under litigation.
Cashflow in the year ahead is at a critically low level, and even with the inclusion of the ‘Ring-Fenced’ funds available from the Clairwood sale, the Company only has financial reserves that will sustain the present business for an approximate period of 18 months.
So all is not lost, and the sea change and massive differences already made in terms of a similarly structured transaction in the Western Cape suggest that KZN racing will be grabbing the opportunity of an injection of new blood, and much needed cash and business acumen to balance the ship, and set for course for a rejuvenation of the sport in the racing-mad province.
