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Dawn management under bond probe

DAWN Properties board has instituted a probe into how management registered a mortgage bond over African Sun Ltd’s prime hotel — Crowne Plaza — without the approval of the board.

In a statement attached to the company’s interim financial statements to September 2010, Dawn Proprieties Ltd chairman Tendayi Chimuriwo announced his board had instituted an investigation into the matter.
He says the company is in the process of cancelling the bond.
Chimuriwo said:  “At the company’s last annual general meeting shareholders were advised that a mortgage bond over Crowne Plaza was registered without the board’s knowledge and approval. The bond is in the process of being cancelled. The company’s lawyers are confident that this will be achieved without acrimony. Your board has instituted an investigation of the matter and stakeholders will be appraised of the outcome in due course.”
Businessdigest exclusively reported a few months ago how the board had clashed with management over the Crowne Plaza bond.
But others said the issue was an oversight brought about by board changes at Dawn.
ASL had hoped to use the bond as collateral for a US$11 million loan from Industrial Development Corporation.
Chimuriwo said his board had initially sanctioned the move amid hopes the funding would translate to higher room rates and occupancies but later chose not to proceed.
In 2007 African Sun, decided to refurbish under a five-year plan that would see US$60 million dollars being raised.
At least 20 million would go toward refurbishment of local properties with the balance reserved for expansion.
On November 13 2009 an EGM was held, where the group asked for a US$10 million rights issue, US$10 million private placement and US$15 million debt which all sailed through during the meeting.
On December 12, the rights issue closed and African Sun received US$10 million.
Dawn Properties Ltd says revenue growth in the last half to March will surpass the interim revenue.
Group turnover increased in the first by 62% to US$2,6 million.
Dawn says this is a result of the marked improvement in the economic environment.
The company’s operating expenses, however represented 87% of the turnover achieve in the period.
The company remains optimistic going forward but says its business “fortunes followed” the country’s “political fortunes”. — Staff writer.

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