Sun International is a casino group located in South Africa with several assets located in Nigeria. The group has seen a decrease in earnings in the area due to the poor economy and because of this, have decided to pull out.
The company announced they were leaving Nigeria due to various reasons including the fact that shareholders had been involved in a long-standing family dispute. The Economic and Financial Crimes Commission had been investigating and this investigation will be protracted. The company will be looking for fair value for the investment that has been made. Sun International has also stated that the dispute between shareholders has frustrated any attempt to improve or develop the property.
The properties in Nigeria that are owned by Sun International saw a decrease in earnings before interest, taxes and depreciation by 58% for the last year that ended in June. Occupancy rates at the hotels owned by the company were also down with a decrease of 42%. The company has another issue, being in a dispute with their partner in the region, Tourist Company of Nigeria. This company purchased 49% of Sun International a decade ago.
In Lagos, Sun International is the part owner of the Federal Palace, a hotel in the area. According to Sun, the board has decided to leave the area and steps will be taken to achieve their leave from the area in a manner that does not take away any further value. The Federal Palace is currently operating in a difficult environment with the economy of Nigeria facing several crises including the price of oil at a decrease.
The Economic and Financial Crimes Commission detained five members of the staff of Sun earlier this year and these individuals have yet to see their passports returned, even though no charges were pressed against them, or the company for that matter. The current environment as well as issues the company is facing is the reasoning behind why the board has decided to exit Nigeria.