Why Sun International folded and liquidated
The reason why Sun International folded and ultimately liquidated is not because of COVID but because of a long standing power battle between the king and Sun Internal Management Limited over the sale of a plot of land. The real troubles facing Sun International started when it was discovered that the company sold a piece of land to Gaitang Ning, D1 Oils Remax owner.
The king didn't understand why he was never told about this sale especially as he now wanted to use the land for cultural activities. Back in 2003 the board of Sun International Limited, then under General Manager Joe Ketfens, sold the land situated next to Royal Villas, exactly the spot where the last Hipnitik event was held, to Ning for E3 Million.
The King wanted the same land for several reasons; to expand the Royal Villas and for cultural activities like Umhlanga so that Imbali can rest and Lutsango can use to showcase and sell their wares during cultural events.
Sun International Management couldn't understand why they were the ones who were taking the flank for selling the land as this was a board decision. Worse still Prince Masitsela sat to represent the king’s interest as liso lenkhosi’ (the king’s eye) at board level.
Everyone, including Tibiyo, blamed Sun International yet it was supposed to be a collective board decision. Sun International Management Limited is a major shareholder in SwaziSpa Holdings Limited and has three hotels under its umbrella; the Royal Swazi Spa, Lugogo Sun and Ezulwini Sun.
The other known shareholder is Tibiyo TakaNgwane with 39.7 per cent while the remainder is held by the general public. The king minced no words that he wanted the land. Sun International tried to buy it back but Ning told them his evaluation had put the property at E12 Million.
A few months later Ning claimed the piece of land was now evaluated to now cost over E100 Million. This is when Sun International Limited realised they couldn't buy the land at that inflated price. To the king’s utter dismay, he also learnt that the company had a title deed over the land and had rights to sell.
In fact, The Bridge has been informed that the value of assets to be sold by liquidators, including the piece of land the company owns, is E800 Million. The company also has E200 Million debts to settle. Efforts to frustrate the company after this land mess escalated and new hotels were opened just next to them with the view that they would leave and the king would take over the running of the hotel. The sour relationship between the king and company deteriorated even further.
The king accused Sun International, not without good reason, of being leeches who had fleeced the country and reinvested profits in South Africa. The argument was that even though Sun International operated their first Casino in Southern Africa in eSwatini the company had not upgraded its group of hotels in the country never mind reinvesting the profits anywhere else in eSwatini.
“If anything the country had birthed all the Sun International Casinos in South Africa like Sun City, Morula Casino and Hotel, Kalahari Sands, Carousel from among many others. Remember Royal Swazi was the first hotel with the casino in Southern Africa so this is where Sun International made their biggest profits,” said a source who worked for the hotel for years.
“The king always complained that Sun International never took the country seriously. He would ask why is it that Royal Swazi Sun’s carpet was still the one he used when he was crowned King. Even the slot machines in the casino were the same and if they get new ones they were always second hand from other casinos in South Africa. The approach seemed to have been that the company would make money here and invest it in South Africa,” continued the source.
The fact that the company had not invested in upgrading their hotel was not an accusation without merit. Some roofs were leaking, the place had not seen a facelift for decades. In 2011 Sun International’s Chief Executive David Coutts-Trotter offered what appeared to be an explanation why they never upgraded their local hotels.
He was quoted by the Times of eSwatini saying the company intended selling its interest given that the significant costs projected to refurbish the three hotels and complex to the required Sun International standards would not provide an adequate return on investment.
Said Coutts-Trotter about the frustration Sun International felt in the country: "Trading has recently been impacted by the opening of a competitor casino in the relatively small market and there are also significant uncertainties relating to the casino licencing and taxation environment in Swaziland. This has unfortunately not allowed us to go ahead with our planned significant upgrades and has forced us to reconsider our investment. This is sad as we have been invested in the Swazi business since formation of the Sun International group almost 30 years ago."
A staffer said the hotel makes a lot of money and in one golf night they made E4Million on the casino alone. They took all that money to South Africa
The opening of Happy Valley Resorts and Casino a few kilometres from where Sun International in 2009 was just a spit in the face and it was now a matter of when than if Sun International would close its business in the country.
The company then tried to relinquish their 50.6 per cent shareholding. However, Sun International had an agreement with Tibiyo which compels the former to involve the latter in any plans to sell its shares.
According to the agreement Tibiyo has right of First Refusal over Sun International’s shares. In essence this meant Tibiyo would be the first to be offered Sun International’s shares. However, should Tibiyo not wish to purchase them, they can be sold to other interested parties. The king simply refused to commit Tibiyo to either take up or waiver its rights to purchase Sun International’s shares.
This stand-off is caused by the king’s belief that he should have offered these shares for free while Sun International reasonably expected to sell them at market price. Sun International wanted to operate only the Casino and sell the hotel to the king but he refused the market value they were selling the hotel.
The Sun International’s properties in the country have been valued at E800 Million and involved swathes of land around Zulwini. Sun Intenational’s Lance Roussow refused to speak to the Bridge when called. He politely asked that the liquidator speak at this stage.
NB: This article has been updated. It had initially reported that the land was sold to Destiny Music owner Tom Lin yet the land in question was told to Gaitang Ning. We apologise to Mr Lin for the error.