Major shareholders in Zimbabwe Stock Exchange (ZSE) listed hotelier Rainbow Tourism Group (RTG) are deeply divided on strategy around handling the group’s creditors and debtors as well as the fate of a sizeable stake in the business which has been touted to be put on the market, Business Weekly has learnt.
RTG major shareholders are NSSA, businessman Mr Nicholas Van Hoogstraten’s various investment vehicles, First Mutual Holdings and the Government of Zimbabwe which holds 4 percent through the Ministry of Tourism and Hospitality.
Close sources say there have been delays coming up with a definitive solution as tussling by shareholders’ representatives on the RTG board is stalling progress.
The divisions are around the proposed clearing of debts and raising of fresh capital for the business with some quotas pushing for liquidation instead of a bailout.
“The questions are around loans and creditors as well as the NSSA loan issue to say where we go now. This is the chaos right now,” said a board member who requested not to be named.
Insiders say a series of formal and informal meetings, between management and some board members and in some cases among non-executive directors have been held in recent weeks to map out a strategy.
The meetings are believed to have been a platform for some shareholders to campaign for allegiance and drum up support for their ideas to sail through. At the same time, board members are trying to win loyalty of executives who are in charge of the day to day running of the business.
It is understood thick volumes of reports containing deliberations and aspirations of some shareholders have been compiled while the battle for supremacy rages on behind the scenes.
The outcome of deliberations will, according to close sources, spell the fate of some executives who are said to have riled their principals one way or another during the fight.
FML has hinted on plans to exit RTG with NSSA confirming it was in talks to take FML’s stake and possibly emerge with 60 percent shareholding. If this sails through, power dynamics at RTG change.
It is understood NSSA, owed millions by RTG, and Mr Van Hoogstraten are of the view the company must be liquidated.
This has viewed by fellow shareholders and management with skepticism given that NSSA is a major creditor while Van Hoogstraten has been linked to some attempts to take over the group’s assets in the form of individual hotels.
RTG’s total equity closed 2016 at US$12,4 million against liabilities of US$34,3 million. Current liabilities comprised US$16,5 million in borrowings, US$17 million accounts payable and US$809 000 bank overdraft.
Included in the short-term borrowings was a US$13,6 million loan facility financed by NSSA. NSSA approached the courts seeking to recover the initial loan of US$10 million plus interest from RTG.
The High Court ruled in favour of NSSA although NSSA is yet to execute the ruling, allowing the company to pursue alternative ways to restructure the balance sheet including NSSA’S debt.