New brooms sweep African Sun

LISTED hotelier African Sun Limited has effected board changes signalling a looming restructuring that could boost its 2015 business prospects.

The new board members, whose mandate will be to oversee the successful completion of major investments the company has made and to safeguard shareholders’ interests, are Ms Tariro Ndebele, Brainworks managing director Mr George Manyere, and Rainbow Tourism Group founding chief executive officer Mr Herbert Nkala.

ASL board chair Mr Bekithemba Nkomo said, “Ms Tariro Ndebele and Messrs Herbert Nkala and George Manyere were appointed to the board on November 24 2014, after Mr SP Cranswick resigned from the board on November 17 2014. His valued contribution to the development of the sales and marketing function and to the board during his tenure is much appreciated.”

Unconfirmed market reports are that the coming in of an experienced board was preparation for a soft landing for ASL group chief executive Dr Shingi Munyeza with indications that he has invested more US$2 million in franchise acquisitions.

However, this development comes in the wake of increased shareholding by Brainworks Capital through its subsidiary Lengrah to 43 percent.

Lengrah is a subsidiary of Brainworks Capital.

The disposal was undertaken solely for the purpose of reducing short-term debt, pursuant to the ASL’s strategic thrust of strengthening the group’s capital structure as communicated previously.

Reduction of finance costs by 22 percent for the year ending 30 September 2014 following repayments of amounting to US$6,8 million.

Earlier, there were market rumours that African Sun and Dawn Properties were to be re-bundled into a single entity with African Sun board vice chair Mr Stewart Cranswick taking a pivotal role in the transformations.

“Stewart Cranswick was the operator of Landela Lodges which were then closed due to viability constraints. He also acquired UTC, which was later disposed. Could this investment by Cranswick be another way of looking for assets to strip so he can sell them on at a future date when the market corrects? What is of interest is, on March 26, Dawn issued a cautionary for a disposal of assets.

“Dr Munyeza suspected that this was a way of trying to pick up cheap assets in a depressed market for later disposal when the market turns for the better. Is this not the time to hold on to such assets until the current liquidity crunch improves?” asked the source.

It is also said at the African Sun emergency general meeting, Mr Cranswick made an audacious US$1,2 million bid to buy out management, a claim that could not be independently verified.

ASL claims that it has been selling its shares in order to reduce its debt overhang, which has accumulated since dollarisation in 2009.

It was believed that proceeds of the disposal would reduce the gearing defined as a company’s net debt — from the current 48 percent to 34 percent.

However, Mr Cranswick has since pulled out of the hotel group.

Brainworks, through its investment portfolio companies, offers banking consumer finance products. Under its energy portfolio, Brainworks is active in petroleum products logistics and bulk trading markets, while in tourism and real estate portfolio, it is active in the hotel and real estate business.

In its annual report Brainworks Capital says it plans to attract international partners to turn around its hospitality and real estate investments.

Brainworks says it is optimistic performance will improve as the year progresses due to various initiatives that are being planned, including the disposal of the hospitality group’s remaining 16 percent stake in Dawn Properties.

Brainworks said the advisory role it secured with Atlas Mara was “expected to further deepen our recognition as an emerging advisory firm on the African continent”.

“Our strategy of co-investing with strong international operating partners is showing significant signs of success as we are gradually seeing a growth in profitability in our investee companies, particularly in our commercial banking and consumer finance businesses,” the company said in a letter to shareholders.

Brainworks said it was still to get their fees from the US$1,8 billion worth of indigenisation deals they brokered in the mining sector.

The transactions include the Zimplats deal (US$971 million), Mimosa (US$550 million), Unki (US$142 million), Pretoria Portland Cement (US$28 million) and Caledonia Mining Corporation (US$30 million).

In the financial year ended December 31, 2013, Brainworks’ total revenue was US$2,4 million, down from US$3 million in 2012.