PRIVATE equity investment and advisory firm, Brainworks Capital says it will make a mandatory offer to African Sun’s minority shareholders after acquiring 36.51 percent shares of the hotel group in a series of transactions over the past month.
Brainworks, through its subsidiary Lengrah Investments, which is obligated under the Zimbabwe Stock Exchange rules to make a mandatory offer to buy out minorities said it was working on the proposal.
“(African Sun) has received notice from Lengrah Investments … that it now controls 36.51 percent of the shares in the company,” African Sun told its shareholders in a cautionary statement published on Wednesday.
“Lengrah has further advised that it … intends to make a mandatory offer to acquire the shares of all minority shareholders.”
Early last month, Brainworks acquired a 32 percent interest in African Sun Limited previously held by African Sun chief executive Shingi Munyeza’s Nhaka Trust.
In return, Nhaka Trust received 17,02 percent of Brainworks Capital through a share and cash deal.
Reports indicate that Brainworks beefed up its stake in the hotel group in the past two weeks.
Brainworks bought African Sun’s 12 percent stake in Dawn Properties, which owns most of Afrisun’s hotel premises, for $4.3 million and later raised it to 16.54 percent.
“African Sun was having well documented problems with Dawn over the nature of its contracts for renting the hotel properties, which were based on revenue and this led them to buy Dawn shares to protect its interests,” an analyst told The Source.
“But African Sun also wanted to restructure its balance sheet and reduce its short-term debt and so it sold its stake in Dawn to a friendly investor.”
Afrisun on Monday said that the acrimonious relations with Dawn had improved and continued holding of a majority stake in the property company was no longer necessary.
Officials said the contracts for renting Dawn hotel premises were now ‘water tight’ with leases of over 20 years.
Dawn was a wholly owned subsidiary of African Sun Limited which then spun off wholly owned property interests, retaining the hotel management business.
The sale of Dawn shares to Brainworks allowed Afrisun to reduce its short-term debt, which stood at $12.39 million as at 31 March, by more than 30 percent.Advertisement
Brainworks is now a significant shareholder in both Afrisun and Dawn, but analysts said it was not clear if it would seek a merger of the two.
Other African Sun shareholders include Riustrix Investments with 19.33 percent shareholding and Old Mutual Zimbabwe with a combined 22.15 percent.