HARARE – Rainbow Tourism Group (RTG) says it has moved to increase the par value of its debentures in a bid to consolidate them.
The consolidation is aimed at making the debentures easily tradable on the local equities market’s trading system.
Earlier in January, RTG’s rights and debenture offer aimed at raising $22, 5 million received a 57 percent subscription.
The offers sought to mobilise capital to settle its debt and focus on long-term operations.
The hospitality group was aiming raise the capital after putting up 625 million shares on offer while debentures amounted to 1 974 354 839.
In terms of the offer, the ordinary shares were up for subscription at a price of 0.93 cents per share, on the basis of one ordinary share for 2, 9928 shares already held.
A debenture is a medium to long-term debt instrument used by large companies to borrow money, at a fixed rate of interest.
“Pursuant to the listing of the debentures for tradability on the Zimbabwe Stock Exchange, it has become imperative that we review certain particulars of the debenture to enhance compatibility with the recently installed ZSE trading system for debt instruments, which among other features require a minimum par value of 100 cents ($1) per debenture.
“The company is therefore raising the par value of the debenture from a par value of 0, 93c ($0, 0093) to a par value of 100cents ($1), thus consolidating the number of debentures by applying a factor of approximately 107.53 to the debentures in issue,” said RTG in a notice to shareholders.
The firm said debenture holders will not see a change in the value of their holding as a result of the consolidation.
Prior to shareholders approving the offer last month, RTG had said the funds would be used to retire its debt of over $16 million owed to NSSA.
The debt has been weighing down RTG’s financial performance.
RTG also sought to pay up facilities it accessed from local banks amounting to $2, 1 million and had Statutory obligations amounting to $8, 5 million as at June 30, 2017.
The group posted an after-tax loss of $4, 7 million for the year to December 31, 2017 up from a loss of $29 304 recorded in the prior year.
The widening loss was largely on the back of decline revenues and retrenchment costs.
Revenue declined by 11 percent to $24 million in the period from $26, 9 million in the previous year.