The Herald (Harare)
5 November 2009
Harare — PAN-AFRICAN hotel group African Sun Limited will facelift six local hotels to world-class standards ahead of the 2010 World Cup in South Africa.
African Sun has also said it will embark on new projects in the region as it targets 8 500-room capacity by 2012 from the current 2 926 rooms. It is against this background that the group has proposed a US$10 million rights offer and a US$15 million private placement.
A rights offer is a way by which a company raises capital from its shareholders that buy new shares on the basis of the ones they already hold.
On the other hand, a private placement is also a capital raising initiative, but differs from a rights offer in that the company in question sells shares to new shareholders outside the existing ones.
African Sun is therefore going to issue 125 223 168 ordinary shares of nominal value US$0,01 each to the current ordinary shareholders of the group and the shares would be sold at US$0,08 each. Ten new ordinary shares would be issued to existing ordinary shareholders of the company for every 56 ordinary shares already held.
The hotel group, however, would not indicate conditions for its proposed US$15 million debt-capital. It is against this background that shareholders of African Sun would meet on the 13th of this month to consider the group's directors proposals for a rights issue and debt capital instrument.
"The directors are proposing to recapitalise African Sun through a rights offer to raise approximately US$10 million.
"This exercise aims to raise funds for refurbishment of existing hotels as well as funding regional expansion. The major shareholders have committed to follow their full rights," said African Sun in a statement.
The hotel and leisure group would have 831 472 907 issued and fully paid for ordinary shares from the current 706 249 739 ordinary shares after the extraordinary general meeting to be held next week.
After the EGM African Sun will have a total of 668 527 093 authorised ordinary but unissued ordinary shares from 793 750 261 shares.
Directors believe that refurbishment of the group's hotels would deliver substantial value to shareholders in the medium to long-term.
The hotel group requires US$60 million to complete refurbishment and take hotel room capacity to 8 500 by end of 2012.
African Sun has hotel operations in Nigeria, Ghana, South Africa and Botswana and recently acquired Royal Chundu Zambezi Lodge in Zambia. The lodge is situated in Livingstone close to where the borders of Zambia, Zimbabwe, Botswana and Namibia meet.
African Sun contends that its regional operations contribution to the group's bottom lines would be 35 percent West Africa, East Africa 7 percent, Southern Africa excluding Zimbabwe 33 percent and Zimbabwe 35 percent.
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