Hollywoodbets will acquire all of the Thoroughbred Horseracing Trust’s shares in South Africa’s Kenilworth Racing (KR) amid plans to offset “severe liquidity constraints.”
In a lengthy statement to stakeholders, the Trust and KR proposed certain transactions that will have “a significant impact on the future of racing in the Western Cape.”
Currently, KR is facing a dire financial situation and, absent immediate action, may be forced to “imminently cease all operations.” To avert this outcome, the Trust and KR have sought immediate and sustainable sources of liquidity.
To this end, the board of KR has approved and counter-signed an expression of interest (EOI) with GMB Investments, a company represented by Cape Town-based racehorse owner Gregory Bortz.
Once approvals are received and certain conditions fulfilled, GMB will provide an immediate R130m ($8m) to KR, of which R50m will be granted in the form of a working capital facility.
In addition to the “normal and customary terms typical of such financial arrangements,” GMB will receive an option from KR to subscribe for an equity stake.
Furthermore, a memorandum of understanding (MOU) has been signed with Hollywoodbets for the purchase of all KR shares and claims owned by the Trust. In return, Hollywoodbets will deliver a R200m cash injection upon the successful closing of the transaction.
“Hollywoodbets has already shown its commitment to horseracing in South Africa through its extensive racehorse ownership and sponsorship, and remains steadfastly focused on continuing to promote and give back to the sport it is so passionate about,” said KR.
“Hollywoodbets’ involvement will ensure that thousands of jobs in and around the horseracing industry are maintained and secured.”
Once both deals are completed, there will be two shareholders in KR, namely Hollywoodbets and GMB. It is anticipated that Bortz will serve as Executive Chairman of KR.