Financially distressed Phumelela Gaming and Leisure has entered voluntary business rescue, the company said on Friday, as the business came under severe pressure from the suspension of horse races since the implementation of the Covid-19 lockdown.
The company has also suspended its shares from the JSE, but maintains that there is still a “reasonable prospect” of rescuing the business.
It said its board had on Friday resolved that “the best option to ensure the long-term survival of the company and the sport of horseracing, is to implement a business rescue plan” due to the fact that it was unlikely to pay pay its creditors.
“The company has for some time experienced adverse economic and trading conditions. The effect thereof has been exacerbated by the nationwide lockdown resulting from the Covid-19 pandemic,” it said in a statement.
Phumelela, which listed on the JSE in 2002 said the industry has not staged race meetings since the implementation of the shutdown, and retail betting outlets have been closed, preventing it from generating revenue.
The company operates horse racing and totalisator betting in seven provinces. It is the latest large business to experience financial distress linked to the lockdown.
In April, fashion retailer Edcon also announced that it would commence voluntary business rescue, as its weak financial position took a knock from the lack of business during the lockdown. Phumelela said it had appointed John Evans as the business rescue practitioner.
Various business associations have intensified calls for the government to ease Covid-19 restrictions, arguing that a prolonged shutdown of the economy is likely to lead to more job losses and bankruptcies.
Since the beginning of May, industries such as mining and retail have been allowed to resume operations under strict safety regulations, but critics say more sectors need to open in order to prevent an economic catastrophe.