The R100 million funding extended by the Mary Oppenheimer Daughters to Phumelela Gaming and Leisure is expected to stabilise the finances of the cash-strapped company while it goes through business rescue.
The horse racing company announced that it had received funding from the family of the late mining magnate Harry Oppenheimer, allowing it space to navigate the rescue process which was accelerated by the cancellation of racing events due to lockdown.
“This is not an attempt to save Phumelela as a company or an attempt to invest in Phumelela. It is a critical in ensuring the sustainability of the industry as a whole,” said Wehann Smith, Director of Racing Association.
“It puts Phumelela in a safe space for about six months or so,” he added.
The involvement of the Oppenheimers in the local horse racing scene spans decades, and Oppenheimer senior and his wife, Bridget, bred and owned top race-winning horses. Mary and her daughter Jessica Slack are still active in the sector.
On Friday, the largest operator of horse racing, announced that it had entered voluntary business rescue as it has taken additional financial strain from the suspension of races since the implementation of the Covid-19 lockdown. Horse racing remains suspended under the current level 4 of lockdown, which has seen some industries allowed to resume operations.
The halting of activities is said to have impacted approximately 60 000 people who derive income from the industry, including breeders, grooms and jockeys.
Phumelela said the cash injection would allow it to meet its financial obligations for the duration of the business rescue process, including the payment of stakes at levels agreed with the Racing Association during April 2020.
Phumelela finances were heavily impacted by government’s amendment to regulations from April 2019 which halted a 3% levy it received from betting tax.
The company said at the time the regulation had depriving it of income of more than R6 million a month, on average.
“The lockdown was the final nail,” said Smith, who is also part of a task team mandated by the Mary Oppenheimer Daughters to engage with Phumelela. He added that talks between the company and the Fund started almost a year ago, as the finances of the operator started deteriorating.
Funding was subject to several conditions, including the decision to initiate business rescue.
In April, the Mary Oppenheimer Daughters unveiled a R1 billion donation to the Solidarity Fund aimed at fighting the coronavirus pandemic in South Africa.