End of the road for Dawn minorities

BUSINESS REPORTER

Hospitality group African Sun Limited (ASL) will make a compulsory acquisition of shares owned by Dawn Properties Limited (DPL) after obtaining a court order to wholly own the property concern.

In 2020, ASL made an offer to acquire all the issued ordinary shares in DPL, based on 1 issued ASL ordinary share for every 3,988075946 DPL issued ordinary shares.

DPL Shareholders representing 94.78% of the DPL issued ordinary shares accepted the offer.

DPL Shareholders holding 5.22% of DPL issued ordinary shares (“Remaining Shares”) did not accept the Original Offer.

In a notice, ASL said it had obtained a court order to acquire the shares held by minorities.

“The effect of the court order is that ASL is entitled and bound to acquire all such remaining Shares on the same terms that applied to the shares whose holders accepted the Original Offer.

“…ASL hereby notifies the holders of the remaining shares that it shall acquire all the remaining shares, as it is entitled and bound to do so, with effect from 28 April 2022, on the same terms that applied to the shares whose holders accepted the original offer,” it said.

In September 2020, ASL made an offer to wholly acquire DPL. The offer opened on October 23, 2020.

When the offer closed on November 13, 2020, DPL shareholders had surrendered 2,237,443,354 shares, constituting 91.06%.

In January last year, ASL gave the remaining DPL shareholders 30 days to accept the offer.  Another offer was made again in October last year.

In a circular to shareholder in 2020, ASL said the acquisition of DPL would consolidate the hospitality group’s position as the largest provider of hospitality services in Zimbabwe.

It said the full integration of the business, expected to be achieved within two years, would enhance African Sun’s earnings per share and gives the group full control of the freehold title of the seven (7) hotels it currently leases from Dawn.

“With no rental payments, the liquidity improves at African Sun allowing better management of working capital,” the group said adding that the group will have a structure that allows them to attract investment (debt or equity) on a property by property basis.

It said cost savings will be unlocked after the acquisition as the current structure of two listed companies creates material cost duplication to achieve the same objective.

In a letter to shareholders, ASL board chairman Alex Makamure said the demerger of the businesses of African Sun and Dawn in 2003 did not bring the desired results.

He said the shareholders in ASL were of the view that the hotel assets were not sufficiently factored into its share value, and that a demerger would result in a favourable sum of the value of the parts from a valuation point of view.

Makamure said it was anticipated that a demerger would be efficient and result in making both African Sun and Dawn attractive for investors who wanted to invest in specific assets and operations and that the resultant structures would attract debt funding.

But he said none of the anticipated benefits had materialised.