PHUMELELA Gaming and Leisure’s involvement in horse racing in Gauteng had been "disastrous" for the province and its involvement in the Western Cape would kill the industry there, Phindi Kema, CEO of Africa Race International, said on Monday.
Ms Kema, a racehorse breeder, presented herself as a witness to testify against a merger that would ultimately see JSE-listed Phumelela administering Gold Circle’s Western Cape operations.
The transaction — whereby Kenilworth Racing and the Thoroughbred Horseracing Trust would take control of Gold Circle Western Cape — was prohibited by the Competition Commission earlier this year.
The parties then approached the Competition Tribunal to overturn the prohibition. They argued that without the transaction, the industry in the Western Cape ‘would die’. But Ms Kema and her special adviser Ian Jayes on Monday testified that Phumelela had sold horse-racing assets in Gauteng, the Eastern Cape and Bloemfontein to benefit its shareholders and not the industry.
In Gauteng, only two racecourses remained and they were not properly maintained, Mr Jayes said. The Vaal racetrack had become a "total mess" since Phumelela took over, he said.
Ms Kema, who has been vocal about the state of competition in the market, laid complaints with the commission and the public protector. She has also taken the Gauteng legislature to court.
She testified that the merger had already been implemented despite the prohibition, since Phumelela’s racing manager, Patrick Davis, was running racing in the Western Cape.
Gold Circle’s attorney, David Gordon, said Gold Circle was controlling the decisions made in the Western Cape. He quickly added that he was not there to answer her questions when she wanted to know who was paying Mr Davis.
Gary van Dyk, a corporate finance expert from Purple Capital, who showed interest in obtaining the Gold Circle assets in the Western Cape and KwaZulu-Natal, projected a loss of R10m for Gold Circle in the Western Cape for the 2012 financial year. A small increase in revenue from its betting and racing assets would be sufficient to return Gold Circle in the Western Cape to profit, he said.
"The current financial position of Gold Circle Western Cape as a stand-alone business does not, in my view, threaten it with closure. Whilst it is currently income-poor, it has a significant asset base, including both physical property (some of which can be sold to raise cash for investment) and valuable income-generating rights," he said.
* Ian Jayes was incorrectly named Ian James in an earlier version of this article.