The hospitality concern has been mired in a US$15 million short-term debt compounded by high interest charges, a situation that negatively impacted on the group’s performance this year. “We have managed to source cheaper funding with an effective rate of 15% through a local bank which covered most of the short-term debt,” group CEO Chipo Mtasa told Standardbusiness.
The group had earlier this year announced at an analysts briefing that it would embark on negotiations aimed at lowering interest charges from 17% to less than 15%.
“However, the only way the group will address this issue is through re-capitalisation which is currently underway,” she said.
“Relevant updates will be made in due course following extensive consultations with stakeholders.”
The group needs to recapitalise to the tune of US$15 million, but remains confident in its capital-raising initiatives despite the exit of Econet Wireless in its shareholding structure.
“The exit of Econet Wireless from RTG did not have an impact on the group’s operations and strategic plans. The group will still continue its capital raising initiatives which commenced this current year,” she said.
According to the company’s June 30 2011 results, current liabilities outweighed current assets raising fears that the company was teetering on the brink of insolvency.
Mtasa said that the reopening of A ‘Zambezi River Lodge would lead to an improved assets-to-liabilities ratio of 2:1 in 2012, as there would be an increase in revenue from operations commensurate with the increase in rooms available .
“The reduction of the short-term debt will also play a significant role in achieving this desired outcome,” she said.
RTG has adopted strategies such as product refurbishment, disposal of non-core assets to offset borrowing, restructuring of short-term debt and recapitalisation to revamp the group’s operational capacity.
With regard to refurbishment, the group said it would continue its revamping programmes in the course of 2012.
Mtasa said the refurbishment exercise for Bulawayo Rainbow Hotel would commence next year while the Kadoma Hotel and Conference Centre refurbishment exercise, which began in the last quarter of 2011, would be completed next year.
The group is also currently revamping Hotel Mozambique in Beira and this exercise is expected to be completed over the course of 2012. The group partnered with shareholder National Social Security Authority to build the Beitbridge Hotel which is currently under construction. The 140-roomed hotel is expected to be completed by the third quarter of next year.