Phumelela breached loan covenants after shake-up of gambling industry

The horse-racing operator's profit is under threat from new rules that have seen a 3% levy on punters' winnings withheldPhumelela Gaming & Leisure said on Friday it had breached loan covenants on R300m of debt, amid uncertainty over new gambling laws that have already significantly dented its profitability.3% levy on punters' winnings being withheld, costing the company R6m on average per month in income, the group said in a statement on Friday.

“In view of the reduced profitability and the withholding of the 3% levy, the carrying value of assets may have to be reassessed,” the statement read.In March, Phumelela said the proposed amendment to Gauteng’s gambling regulations could cost it R75m a year while also damaging the local horse-racing industry.

It has said previously it was in talks with Gauteng policymakers and the province’s gambling board “in an attempt to reach a mutually acceptable resolution”.In May, Phumelela’s legal advisers recommended that it apply to the high court to set aside a report byinto allegations of maladministration and improper conduct regarding “the corporatisation of the horse-racing industry in SA”.

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