Harare June 15 (The Source) – Rainbow Tourism Group (RTG) shareholder Nick Van Hoogstraten has opposed the group’s decision to restructure a $10 million NSSA loan, arguing that the initial loan was not used for its intended purpose.
The loan, which was due December 2015, has been restructured to a seven year loan with an annual interest of 6 percent. It now sits as a $13.6 million long-term liability; following the signing of a loan term sheet to restructure the loan was signed on March 30 2016.
At the company’s annual general meeting in Harare on Wednesday, Van Hoogstraten, who holds about 36 percent shareholding in RTG, opposed adoption of the Group’s 2015 Annual Report, saying the restructured loan had not been accounted for correctly.
Van Hoogstraten argued that the company should have held an EGM to approve the restructuring, and also claimed that the restructuring had been approved by interested parties, referring to NSSA-appointed directors who sit on the RTG board.
The businessman also opposed the audit fees and reappointment of Grant Thornton as auditors of the Group for the year.
Meanwhile, RTG’s revenue for the four months to April 2016 increased 13 percent on the comparative period last year to $8.6 million driven primarily by strong showing in their Zimbabwe hotels.
Presenting the group’s trading update, RTG chief executive Tendai Madziwanyika said despite continued liquidity shortages, Zimbabwe hotels’ performance remained positive.
“The group’s revenue grew by $1 mln (13 percent) to $8,6 mln in comparison to $7,6 mln in prior year. The growth was driven by the Zimbabwe hotels which continued to register strong performance despite the continued liquidity challenges being experienced in the economy,” he said.
The group’s occupancy rate grew to 48 percent from 38 percent recorded same period in 2015, while market share increased to 32 percent compared to 27 percent recorded during prior year.
“While Zimbabwe hotels registered strong performance, Rainbow Hotel Mozambique (RHM)’s revenues were down by 46 percent in comparison to same period in 2015.The hotel has continuously recorded declining revenues year on year and this subdued performance is attributable to the current political instability in Mozambique,” he said.
In the period under review the group’s costs declined by $1.3 million while year to date total operating costs reduced by 17 percent compared to prior year.
Meanwhile, Madziwanyika said during the past three years the company has reduced the working capital gap – the difference between current assets and current liabilities — from a negative $12.4 million to a negative $9.2 million.
“Operationally the business has managed to generate an average EBITDA of $4 million which has been channelled towards refurbishment of the hotels and loan servicing. However, the financial position remains burdened by the balance sheet structure. We expect to have lasting solution during the course of the year,” he said.
RTG said it was now focusing on creating a sustainable capital structure which will be key to its turnaround plans.
“We will continue to monitor the macro-economic environment and apply appropriate strategies that create value for the company’s stakeholders,” said Madziwanyika.