RAINBOW Tourism Group (RTG) is poised for stability and growth after shareholders recently agreed to bury the hatchet and co-operate for the revival of the hospitality company amid revelations the group’s major shareholders have endorsed an impending US$15 million capital raising programme.
Report by Clive Mphambela
Well-placed sources close to developments at RTG told businessdigest this week the group would be pressing ahead to seek the additional funding from shareholders to support its operations.
The funds will be raised by way of a US$10 million medium-term loan while the difference of US$5 million will be funded through a renounceable rights offer to existing shareholders.
“Shareholders seem to have resolved their previous boardroom squabbles and seem to be pulling in the same direction,” a source said.
“The company is now entering a new era of stability and growth.”
At a shareholders’ meeting slated for end of October, controversialtycoon Nicholas van Hoogstraten’s appointees on the RTG board –– Ian Haruperi, Shingirayi Chibhanguza and Edgeton Tsanga –– would be confirmed as directors.
A source said this was part of wider plan to appease Van Hoogstraten, who has been fighting for board representation at RTG.
The trio joined the board in line with Article 106 of the company’s Articles of Association.
National Social Security Authority (Nssa) appointees –– Joseph Kanyekanye, Sylvester Maunganidze, Rosa Dube and Douglas Hoto — will also be confirmed as directors.
A major shareholder in RTG also confirmed to businessdigest the group was in the market for a US$15 million funding lifeline.
“This sort of information you are seeking would have been better communicated by the (RTG) board chairman Joseph Kanyakanye but I can confirm that we have received a proposal that is being considered in terms of our normal due processes regarding such investments,” the source said.
“The proposal is presently being looked at by our investments team and recommendations will be tabled to our board for approval in line with our due processes.”
Information gathered by businessdigest suggests RTG needs a US$10 million medium-term loan with a tenure of at least three years. The company, however, would need to approach its current shareholders for the balance of US$5 million to be raised by way of a renounceable rights issue.
The developments come after a previous proposal based on a sale and lease-back arrangement of a major RTG property –– the Bulawayo Rainbow –– to Nssa faced stiff resistance from Van Hoogstraten.
That proposal fell of the table and RTG is now considering a medium-term loan secured by the real estate.
“The sale and lease back arrangement raised differences due to valuations,” the source said.
Given the scarcity of liquidity on the market, it is likely that RTG major shareholders –– Nssa and Van Hoogstraten –– will be able to underwrite both the rights issue and the loan transaction.
Nssa and Van Hoogstraten have previously disagreed on various issues surrounding management of the tourism operation with the latter charging that management and board performance was below his expectations.
The two major shareholders have previously agreed to implement certain board and management changes although the business magnate still insists some of the changes agreed to with Nssa have not been effected to his satisfaction.