A Chilean investment company says it has made a formal proposal to acquire a majority stake in resort hotel chain and casino operator Sun International, owner of Sun City. 

Nueva Inversiones Pacifico Sur (IPS) said it approached Sun International's board and expressed a "firm intention" to acquire 50.1% of the hotel group's shares. It is offering a cash price of R22 per share. The group's shares were trading at R18.10 when the JSE closed on Wednesday, having recovered from a low of R8.33 towards the end of May.

Sun International CEO, Anthony Leeming, told Fin24 on Wednesday evening that the group has not received a formal offer from IPS yet to consider, but has seen the letter that the company published in the media about its intentions. "We are having discussions on the back of that letter and we will respond on the Sens (stock exchange news service) tomorrow," he said.

The listed leisure company has been hard hit by SA's national coronavirus lockdown, which forced it to close its hotels in the country for three months. The group’s operations in Chile, Peru, Argentina, Colombia and Panama also closed in March.

As a result, the company has been forced to cut salaries and lay off staff to stay afloat.  It also recently announced that it is planning a R1.2 billion rights offer.

IPS said in a statement it wants to provide Sun International with interim liquidity support in the form of a bridge loan, which is included in the offer that was presented to the board. It has also proposed to underwrite at least 50.1% of the R1.2 billion rights issue.

"If the partial offer is approved, this interim liquidity support would significantly strengthen Sun International’s ability to weather the uncertainty of Covid-19 in its key markets, while protecting shareholder value and preserving jobs," said IPS. 

The Chilean company said it believes that its offer is compelling and provides a win-win for all stakeholders groupings. It pointed out that the R22 offer equates to a 68.26% to Sun International’s 1-month volume weighted average price.