adminto repay US$4 million it borrowed from Ecobank to follow their rights in 2009.
The first batch of 78 million shares valued at US$1,17 million was sold on Monday and another batch is expected to go through later this week.
Market sources said Burypast entered into an arrangement with Ecobank whereby the latter would provide funds to the former to exercise their rights.
The US$10 million rights issue was on the basis of new 10 rights offer shares for every 56 shares already held. They were allotted at a subscription price of US8c. The group’s value has dropped 81 percent.
Burypast failed to repay within the agreed period, resulting in Ecobank releasing security, which had been pledged in the form of Africa Sun shares.
“Ecobank entered into a put option contract with Burypast but the consortium has failed to repay within the agreed period,” said one source.
“Now that the consortium has failed to repay, Ecobank, which is the holder of the security, is now exercising its right to sell the shares that African Sun management consortium had pledged as security.”
An Ecobank spokesperson said the bank does not discuss client issues in the media.
African Sun chief executive Mr Shingi Munyeza said in an interview yesterday he was not obliged to comment on issues “concerning shareholders”.
Proceeds from the US$10 million rights offer had been used as working capital and refurbishment. It also reduced the negative working capital position to US$1,4 million from US$9,6 million in 2009.
African Sun pared down its ambitious forecast for rooms under management by 2013 to 5 500. The market had cast doubt on the target, but more so, on the returns, especially in the West Africa region.
The hospitality group manages 19 hotels and lodges through lease and management contracts.
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