HARARE, January 17 (The Source) – Shareholders of the Rainbow Tourism Group (RTG) on Wednesday approved the company’s plan to raise $22,5 million through a rights offer and linked debentures as part of measures to restructure its balance sheet and lower its debt.
Chairman Sijabuliso Thabani Biyam said the restructuring will reduce the debt burden on the balance sheet, with $16,4 million from the rights issue meant to pay off the debt to its major shareholder, the National Social Security Authority (NSSA).
“This will allow RTG to focus on long term strategic needs of the business instead of concentrating on its short term survival,” he said.
All the resolutions were approved at 65.36 percent.
Biyam said the company has over the years struggled to pay the debts, which after the restructuring will fall to $22 million from $42 million.
“The company could not settle the loans and NSSA has since been granted judgment in its favor against the company by the High Court of Zimbabwe. One of the company’s properties which were used as security against the $10 million loan has been declared especially executable to satisfy the judgment,” said Biyam.
“Failure to settle the loans may result in the company losing some of its properties and the proposed debenture issue will therefore be partly applied towards settlement of the loans from NSSA,” he said.
Meanwhile, the offer to members of the company, will be on a pro rata to their respective existing shareholding of 625,000,000 ordinary shares at a subscription price of 0.93 US cents per share on the basis of 1 ordinary share for 2.9928 shares already held.
Each rights offer shall be linked to 2.871 redeemable debentures with a subscription price of 0.93 cents each at a coupon rate of 6 percent per annum. The amounts due on both the shares and linked debentures will be payable in full on acceptance of the offer.
Major shareholders of RTG are NSSA and Nicholas Van Hoogstraten’s Hamilton and Hamilton Trustees , with 56 percent and 32 percent respectively.