BRAINWORKS Capital Management has acquired a 32 percent interest African Sun Limited (ASL) in a transaction that sees the hotel and leisure group’s chief executive Shingi Munyeza become a key shareholder in the private equity firm.
Munyeza’s family trust, Nhaka, controlled the 32 percent shareholding through various vehicles and the deal with Brainworks will see the African Sun CEO become a significant shareholder in Brainworks, owning about 17 percent of the firm.
ASL also announced the disposal of a 16.54 percent interest in Dawn Properties, the company which manages its hotel properties, to Branworks for about US$4.3 million.
“African Sun disposed of 294,7 million Linked Units in Dawn Properties Limited for a consideration of US$4,3 million to Lengrah Investments, a hotel and real estate investment company incorporated in Zimbabwe,” African Sun said in a statement.
“Lengrah is a subsidiary of Brainworks Capital. The disposal was undertaken solely for the purpose of reducing short-term debt, pursuant to the ASL’s strategic thrust of strengthening the Group’s capital structure as communicated previously.”
The transactions will see Brainworks, which was at the centre of controversy over its involvement in some of the country’s major indigenisation transactions, become a significant shareholder in both African Sun and Dawn properties.
More significantly for African Sun however, is the fact that a key shareholder in Brainworks is the German-listed African Development Corporation with the hotelier hoping the pan-African investment group will help boost growth prospects through capital raising initiatives and referrals.
“African Sun hopes to leverage on its shareholder base that now includes the likes of ADC and Brainworks and Old Mutual as the some of the high profile shareholders of the hospitality company. Brainwork’s becomes a significant shareholder in both African Sun and Dawn,” said Munyeza.
ASL also hopes that the cross shareholding between involving Brainworks will help improve often frosty relations between the hotel group and Dawn Properties, a former subsidiary that was demerged and listed separately in 2003.
Meanwhile, ASL revenue grew by two percent to US$26,6 million over the interim period ended March 31, 2013 from US$26,1 million the group revealed this week.Advertisement
The marginal growth was attributable to a six percent growth in Average Daily Rate (ADR) on the back of a reduction in total room nights by six percent from the same period last year.
However business is expected to rebound from the domestic markets as the group enters is peak period.
“The recovery in room capacity is imminent, as we are nearing completion of our refurbishment program for Crown Plaza Monomotapa and Holiday Inn Harare,” said Munyeza.
Cost of sales and administrative expenses were down five percent and three percent respectively driving a 65 percent growth on EBITDA to US$3,59 million (13 percent margin) from US2,17 million (eight percent margin) achieved during the same period last year.
Interest expenses increased by 84 percent from the same period last year to close at US$1,55 million following an increase in short-term loans and the average cost of borrowing.
“The group posted a profit before tax of US$1,23 million from a profit of US$1,50 million in the prior period. Excluding prior year other income and other expenses which were non-recuring, profits before tax grew by 303 percent from US$0,3 million to US$1,23 million,” Munyeza added.