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LISTED hotel group African Sun says the debt restructuring process will be complete before the end of the first half. Chief executive Shingi Munyeza said; “Our major goal before the half year is to restructure our debt as promised; first of all by liquidating the Dawn stake,” he said.
The Dawn Properties transactions involve the disposal of a 12 percent shareholding or 294,705,134 shares by African Sun at a premium.
The group will also undertake a rights offer which is expected to raise US$6 million. Commitment to underwrite the rights offer has already been secured from major shareholders of the company.
The goal will be to reduce gearing from the current 51 percent to a long term target of 30 percent. Post the first sale of the 12 percent in Dawn, gearing is expected to reduce down to 45 percent, which will go down further to 35 percent after the sale of the remaining 16,4 percent in Dawn Properties.
The reduction of the short term debt is expected to boost earnings by saving an estimated US$3 million in finance charges which the company has been paying over the last two financial years.
“This will eliminate the debt overhang that has been there over the years,” he said.
Overall, Munyeza said the group will achieve a slight increase in turnover in 2014 buoyed by growth in the contribution of international markets. However domestic contribution will shrink to 55 percent from 61 percent owing to the current depressed economy.
International market contribution to the group’s revenue will increase to 45 percent up from 39 percent last year and therefore will have an impact on both volumes and yield.
Munyeza said the group would launch the newly refurbished city hotels in the first quarter. — FinX.
Online Reporter