HomeBusiness DigestCresta still tied to R7m guarantee

Cresta still tied to R7m guarantee

Roadwin Chirara

TA Holdings’ hospitality arm, Cresta Hospitality, is still to be released from a R7 million guarantee it gave for its former Namibian venture, Cresta Pandu Ondangwa Hot

el despite the company having ceased operating the venture.

The hospitality group pulled out of the three-star hotel venture in 2002 after a string of depressed earnings for the company.

Cresta had ventured into the country as part of its regional expansion drive, which saw it taking up the management of the 90-room three-star hotel situated in Northern Namibia.

TA Holdings chairman Shingi Mutasa, in his annual report said the company was still to be released from its financial guarantee in the venture.

“The company has not been released from a guarantee given on behalf of a former subsidiary company, Cresta Pandu Ondangwa,” Mutasa said.

He however said the company
had signed an agreement to transfer the financial obligations of the guarantee to the new owners of the hotel.

“However, a signed agreement to transfer the guarantee of R7 million to the new owner of Cresta Pandu Ondangwa Hotel is in place and the company is seeking specific performance from the new owner,” said Mutasa.

Hotels in the group’s stable recorded a loss of $252 million during the year ended 2004 largely due to depressed room occupancies which fell to 45% from the previous levels of 58% in 2003.

Mutasa attributed the decline in business to the loss of patronage from the banking sector and non-governmental organisations.

“Company sales growth for the year was below inflation, consequently the company recorded a loss of $252 million,” Mutasa said.

He said escalating operational expenses had also impacted on the earnings of the hospitality division.

“Operational expenses were adversely affected by high electricity and payroll costs as well as finance charges,” said Mutasa.

He said the group had projected room occupancies to remain low in the medium-term for the hotel divisions.

Mutasa said the company would be injecting over $8 billion in the renovation of the Jameson Hotel.

“One of the hotel units, Jameson Hotel, will undergo renovations in the first half of 2005, the company will require to finance the soft furnishing amounting to about $8 billion,” said Mutasa.

TA Holdings has interests in short-term insurance, life insurance, hotels, agrochemicals and holds a 100% shareholding in the Cresta Hospitality Group.

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