RTG rights issue partially subscribed

HARARE - The Rainbow Tourism Group’s $22,5 million rights issue has been partially subscribed amid indications that the National Social Security Authority (Nssa) will increase its shareholding in the listed hotel group.

Nssa currently holds over 60 percent shareholding in RTG.
RTG company secretary Napoleon Mtukwa yesterday said the group’s rights offer netted $12,7 million, which is 56,52 percent subscription rate resulting in the underwriter — Nssa — chipping in with $9,8 million.

“The rights offer shares and debentures will be issued and listed on the Zimbabwe Stock Exchange with effect from February 26, 2018,” he said.

The hotel group will now proceed to use the capital raised from the rights issue and the debenture will go towards servicing some of the group’s “legacy debt”, which has been weighing down the group’s financial performance for years.

The latest development comes at a time when the listed hospitality group is eyeing a return to profitability in the current financial year after repaying legacy debts to international financiers amounting to over $10 million.

RTG — which has been in a streamlining and restructuring drive since 2012 reducing annual staff costs by $3 million — is also consolidating local operations after exiting from its local and regional loss-making operations.

The group recently exited from its operations in Beitbridge and Mozambique operations due to low occupancy levels and a depressed market caused by political instability in the northern part of Mozambique as well as unsustainable translation risk.

Last month, RTG chief executive Tendai Madziwanyika said the capital raised would enable the company to have a better rating on the market.

“We are very excited about it because the fact that shareholders have resolved to essentially restructure the balance sheet of the organisation, which has put closure to a lot of these old debts and a lot of them emanating from the pre-dollarisation era. So we struggled over the years to pay as much as we could,” he said at the company extraordinary general meeting in Harare.

“Earlier on, we said the debt was about $42 million after this restructuring, the debt is now at $22 million, which is much better. It leaves our gearing ratio at about 35 percent and that is very important going to the future. It allows us to have a better rating and be able to exploit opportunities that are available in the market.” — The Financial Gazette


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