HomeBusiness Digest$80b for RTG recapitalisation

$80b for RTG recapitalisation

Chris Goko

HOSPITALITY group Rainbow Tourism Group (RTG) is set to recapitalise to the tune of $80 billion, businessdigest learnt this week.

ns-serif”>While confirming the recapitalisation programme by way of a rights issue, RTG group chief executive Chipo Mtasa would not commit herself to the figure.

“RTG is looking at the possibility of recapitalising,” Mtasa told this paper on Wednesday.

“It’s being prompted by management. to buffer (up) resources,” she added.

The company, insiders say, believes a rights issue is the best way of restructuring its balance sheet.

Amid suggestions that the Zimbabwe Stock Exchange-listed group could embark on the money-raising event on a phased basis, Mtasa would not be drawn on the deal structure or action plan.

She could only say RTG wanted to raise “a substantial amount of money”.

Observers said this week that 52% owners of the group – France’s Accor Afrique and the Zimbabwean government – were willing to shore up their investment in the hotel group.

They pointed out though, that the government, through the Ministry of Environment and Tourism, was more prepared for a lower investment.

“In as much as government wants to galvanise its position in the group, it is hoping for a smaller cash injection of say $30 billion due to fiscal constraints,” said a source.

Government, through Francis Nhema’s Tourism ministry, directly owns 17% of RTG.

The company, 35%-owned by Accor, has seen an increase in operational costs and profits stymied by the current economic problems, blighting virtually every sector of the economy.

Earlier this year, the group paid a huge bill in management fees to Starwood, which owns the Sheraton franchise.

The bill, at nearly US$1 million, had accumulated over four years.

“We had an accumulation of management fees. to Starwood, but we cleared that earlier this year,” Mtasa said.

With the 20-year Sheraton franchise expiring this year, it emerged this week that government had instructed the hospitality group to re-engage Starwood over a possible extension of the franchise.

This is despite the fact that the RTG has a technical agreement with Accor, one of a few foreign investors to land in Zimbabwe in recent years, and that the French group was preparing for the launch of its Soffitel brand.

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