RTT will oversee re-structuring of racing industry

RTT will oversee re-structuring of racing industry

May 12, 2020 / 2 months ago

RTT will oversee re-structuring of racing industry cover image
Wéhann Smith

Wéhann Smith, CEO of CTS, is a member of the five-man team tasked with safeguarding, re-capitalising, and restructuring the racing industry in the wake of Phumelela Gaming (PGL) going into business rescue last week.

The team of Smith, Brian Riley, Charles Savage, Mike de Kock and David Abery comprise the Restructuring Task Team (‘RTT’), who are not being remunerated for their work. They have offered their skills as they are fully aligned and committed to the objectives of rebuilding the industry. 

According to a statement released last Friday, “Many of the negotiations have been and will continue to be subject to non-disclosure agreements. We have been able to ensure payment of stakes, albeit reduced, for the foreseeable future. The RTT will communicate with all stakeholders as and when we are able to do so”.

The RTT answered questions surrounding Phumelela’s Business Rescue, the Post Commencement Finance, the continued involvement of RA directors and the immediate future of racing, as below:

Q:           Who are you/ Why are you doing this?

A:            Mary Oppenheimer Daughters (MOD) refers to the family office of Mary Slack (nee Oppenheimer) and her four daughters. MOD provides a range of services to the family and their various interests. MOD is involved in order to protect, secure and advance the interests of all racing’s stakeholders through the considered restructuring, transformation and re-capitalization of the horse racing industry.

Q:           What is Post Commencement Finance? (PCF)

A:            PCF is finance provided to a company once business rescue proceedings have commenced.

Q:           Will PGL survive business rescue? Not many companies do.  What makes this situation different or is this the beginning of the end?

A:            The post commencement funding allows sufficient time for a suitable deal to be negotiated by the Business Rescue Practitioner and stakeholders. Many Companies entering Business Rescue do not receive such funding.

Q:           What is the difference between the old PGL and the new one under Business Rescue?

A:            The affairs of PGL will be overseen by a Business Rescue Practitioner who is experienced in working with parties who are financially distressed, their creditors and other stakeholders.

Q:           Does MOD now own PGL?

A:            No, they have simply lent money to PGL via a Post Commencement Finance agreement to avoid PGL liquidating and to ensure business, including racing, can continue for the duration of what is expected to be the Business Rescue process.

Q:           If we do not race for another month or two will PGL run out of money?

A:            It is anticipated that the funds provided will be sufficient for PGL to continue operations for a short period. However, the sooner we race here and around the world the better for all in the industry.

Q:           Has Covid-19 and Governments approach to it killed racing?

A:            Zero revenue for the last few weeks has certainly brought the industry to its knees and in PGL’s case likely precipitated a Business Rescue.

Q:           How does this affect racing and the racing industry?

A:            For now, when allowed by Government it is envisaged that races will continue with PGL continuing to operate Business Rescue.

Q:           What are the consequences for the stakes arrangement?

A:            Stakes will still be paid under the condition of the PCF at the levels previously agreed by PGL until the end of the season. A new stakes agreement will be negotiated.

Q:           Does this have Government support? Have you liaised with government?

A:            Some engagement has taken place and from meetings with various Government Departments it appears likely that a master plan for the industry will be agreed.

Q:           Are you going to buy back the race courses?

A:            A potential transaction is still in its infancy. We are unable to comment at this stage, however race courses need to be secured for the sustainability of the sport.

Q:           Is transformation factored into the negotiations?

A:            It is certainly envisaged at this stage.

Q:           How long before a deal is done?

A:            A minimum of 3 months and probably longer.

Q:           Will we be updated regularly?

A:            Negotiations are usually concluded under a Non-Disclosure Agreement and therefore until a deal is reached (or not) very little can be shared. Unfortunately, these things take time and patience is required.

Q:           Are the Racing Association Directors conflicted in offering advice to MOD?

A:            On legal advisement it is believed not. They are acting for no financial consideration, in the interests of the horse racing industry and with the full support of the previous and current Racing Association Boards as well as other leading industry bodies. However, if any conflicts emerge at any point, appropriate steps will be taken to ensure conflicted parties are excluded from negotiations and decisions.