LISTED hotel group Rainbow Tourism Group (RTG) directors have approved a controversial deal in which the company pledged three of its properties — A’ Zambezi River Lodge, Bulawayo Rainbow Bulawayo and Rainbow Hotel Victoria Falls — as security for a contested US$13,6 million loan from major shareholders, Nssa, businessdigest has learnt.
By Taurai Mangudhla
“Two of the hotels are security for PTA and Afreximbank loans and Nssa will automatically assume 1st sole priority creditor status effective July 2017 when these loans are cleared. I have access to the term sheets, but there is a confidentiality clause,” said an insider who requested not to be named.
The RTG board resolved to restructure the US$13,6 million loan, which was due in December, to a seven-year tenure at 6% interest per annum compared to the previous 10%.
Information gathered by businessdigest shows the directors debated and approved term sheets that had among other provisions a confidentiality clause that barred all parties from disclosing tenants of the agreements unless required by law. This is despite the fact that RTG is a publicly listed company with hundreds of minority shareholders who have a right to information that has a material impact on the company.
Contrary to RTG chairman John Chikura’s claims the new terms have a 6% interest only, businessdigest can reveal a 5% interest on outstanding interest payments as at December 2015 is to be paid under the new agreement.
Effectively, some insiders at RTG, say the loan will be accruing an interest of 11% per annum.
British investor Nicholas van Hoogstraten, who holds shares in RTG through Hamilton and Hamilton Trustees, is opposed to the loan restructuring on grounds it was illegal for the board to effect the decision without shareholders’ approval.
At the company’s annual general meeting in Harare last week, he said the directors of the group were conflicted. Van Hoogstraten argued directors appointed by Nssa and First Mutual, which jointly hold a majority stake in RTG, were not supposed to vote on the decision.
Van Hoogstraten was seeking to block three motions from sailing through as soon as the meeting opened. The motions related to the adoption of financial accounts, which were joined to the restructuring of a US$10 million loan facility by the hotel group’s largest shareholders, Nssa.
They also related to the approval of the remuneration and re-appointment of Grant Thornton Chartered Accountants Zimbabwe as auditors for the current financial year.
In an interview with van Hoogstraten in the capital this week, he said RTG auditors erred by approving fraudulent statements. The businessman said the company has no choice but to convene an extraordinary general meeting to approve the loan restructuring.
The RTG shareholders remain divided on the restructuring, which prompted them to convene a meeting for major shareholders on Tuesday.
Insiders, however, say Nssa representatives on the board snubbed the meeting for unknown reasons. Van Hoogstraten, according to sources, stuck to his guns seeking to cause an EGM and interrogate the loan restructuring.
“We need to move forward and I am sure my fellow shareholders have now realised they need to put milk back into the bottle,” said van Hoogstraten, confirming the Tuesday shareholders meeting.