HOTEL and Leisure group, African Sun Limited (ASL) has increased acquired an extra 12 percent interest in listed property firm Dawn Properties for about US$3.7 million taking its interest in the company to about 29 percent.
"The board wishes to advise shareholders that African Sun Limited has recently acquired 294 705 134 shares in Dawn Properties as part of our strategy to protect and enhance shareholder value," said African Sun in a statement.
"This acquisition represents 11,99% of the issued share capital of Dawn and brigs the shareholding of the company to 28,54%. The consideration, including transaction costs of US$3,710 442, 24 has been settled in full."
Formerly a wholly-owned subsidiary of ASL, Dawn Properties owns and several of the hotel groups properties, among them Carribea Bay, Crown Plaza Monomotapa, the Elephant Hills Resort, Hwange Safari Lodge and the Holiday Inn hotels in Beitbridge and Mutare.
But the two companies have been involved in spat over rentals and Dawn has since initiated legal proceedings for the eviction of African Sun from some eight properties.
Problems between the two companies started after the collapse of ASL’s US$10 million deal with the Industrial Development Corporation of South Africa. The deal collapsed after the Dawn vetoed African Sun’s bid to pledge Crowne Plaza Monomotapa as collateral in the transaction.
Analysts said African Sun was looking to increase its shareholding in Dawn so that should the hotel group lose the court case against Dawn Properties, it can fight its corner at shareholder level.
If African Sun increases its interest in Dawn to 35 percent it would be obliged to make an offer to minority shareholder for a complete takeover of the company which was unbundled and listed as a separate entity in 2003.
“At this point, ASL can only buy into Dawn up to a maximum of 35 percent. Thereafter, they have to offer minorities,” said one market observer. “The option Dawn has is to either sell out of Dawn or begin to buy into ASL.”
ASL recorded a marginal increase in revenues to about US$26 million over the year ended March 31, 2012 compared to about US$23 million the previous year. Profits for the year reached US$743,259.00
City hotels contributed 48 percent of the revenue while the split between domestic and foreign was 49 percent and 51 percent respectively.
The results came as a relief to chief executive, Shingi Munyeza, who in November last year said the group was expecting to return to profitability in 2013 after posting a loss of US$3,6 million over the full year to September 30, 2011.
The company had incurred a loss of US$6,6 million after shedding off two underperforming units, The Grace Hotel and The Lakes Hotel in South Africa, last year.