The 100% acquisition of property group Dawn Properties will strengthen African Sun Limited (ASL) position as a hospitality provider in the country, board chairman Alex Makamure said.
This comes after ASL shareholders on Tuesday this week endorsed the acquisition of Dawn Properties.
The resolution entailed an issuance and allotment of new shares in the capital of Afsun, to the existing shareholders of Dawn of up to 616,129,718 ordinary shares in the company, at a share swap consideration ratio of one African Sun ordinary shares for every 3.988075946 Dawn Properties ordinary shares held.
Speaking at the company’s virtual Extraordinary General Meeting (EGM) Makamure said the transaction was key and anchors growth in the outlook.
“The transaction will go a long way in strengthening African Sun Limited’s position as a hospitality provider in the country.
This acquisition will also play a part in Afsun’s future growth,” Makamure said.
During the meeting Dawn Properties minority shareholder Elijah Chingosho raised questions around the ratios used on the share swap arrangement of the transaction.
In his response Makamure said the ratios were reached after a valuation of the businesses and two financial advisors from both parties eventually agreed on the ratio to be used.
“Both parties received guidance from their respective advisors before reaching this agreement,” he said.
ASL recently made an offer to acquire 100% stake in Dawn Properties in a move that will see the hospitality firm taking control over the properties.
Dawn Properties are the current owners of properties leased to African Sun and its portfolio consist of Caribbea Bay Sun Hotel, Monomotapa Hotel, Elephant Hills Resort and Conference Centre, Great Zimbabwe Hotel, Holiday Inn Mutare Hotel and Hwange Safari Lodge.
ASL is a leading hotel investment company in Zimbabwe operating internationally recognised brands, with a clear vision to become the benchmark hotel investment company in this market while Dawn Properties is engaged in owning investment property and owns 100% of a property consulting company, Dawn Property Consultancy, formerly CB Richard Ellis Zimbabwe.
The latest transaction comes as the hospitality group has fully integrated and taken over the management of its hotels which were previously put under third party management by South African group Legacy Hospitality Management Services Limited (Legacy).
African Sun last year terminated a deal it entered into over three and a half years ago with Legacy to manage five of its local hotels.
The was touted as the best move towards improving profitability, growth and visibility of the hotels in September 2015, the deal entailed a US$60m facelift of the properties.
The five hotels which were put under Legacy management and were then re-branded include Elephant Hills in Victoria Falls, Monomotapa in the Harare, Troutbeck Resort in Nyanga, Hwange Safari Lodge and the Kingdom at Victoria Falls Hotel.
JSE-listed Arden Capital has majority shareholding in ASL and Dawn owning 57.67% and 66.81% respectively.