The group is mired in interest bearing debt and has proposed to raise US$15 million through assets disposal and raising money from existing shareholders.
RTG also owes CBZ bank US$2 million but says that particular debt is not an area of concern but short-term debt in totality remains a critical issue that needs to be dealt with.
Finance director, Paschal Chang-unda, told Standardbusiness that the group has pegged short-term debt interest rates at an average of 17,8% for all bank loans while 6,6% has been set for long-term debt.
“The CBZ debt was dealt with internally, it has been attended to. We got a rollover for the next six months and obviously with assets at hand for disposal we should be able to fill that gap,” said Changunda.
The assets in disposal group classified as held for sale are valued at US$2,5 million as at the end of December 2011.
Changunda said the disposal of the Bulawayo Rainbow Hotel remains a shareholder issue that can only be resolved at that level.
Last year, RTG proposed a US$15 million re-capitalisation exercise through a sale/lease of its Bulawayo property for US$10 million with the remainder being raised through a rights offer but shareholder wrangles have disturbed the plan.
Short-term borrowings have led to commensurate high finance costs negatively impacting RTG’s bottom line. The debt issue has been critical over the past reporting quarters to the end that short-term debt had a negative US$1,6 million impact on the bottom-line as at the end of 2011.
The group’s single largest individual shareholder, Nicholas van Hoogstraten blames the current RTG board for the group’s current state of affairs alleging incompetence and has pledged not to bailout the company unless he is given suitable guarantees.
The company’s debt closed at US$23 196 908 composed of US$12 324 070 in short term debt and US$10 872838 in long-term debt as at December 31 2011.
The debt was incurred in order to undertake the group’s refurbishment projects as well as covering working capital requirements since the introduction of the multi-currency regime.
The group also noted that the delays in the implementation of the re-capitalisation exercise had led to high borrowings and high interest charges.
The performance of Touch the Wild lodges, Tourism Services Zimbabwe and Matetsi Water Lodge remained depressed for the period under review, thereby reducing group profits from operations by US$916 741.
The board has since approved the disposal of the three entities.
Changunda said the re-emergence of Renaissance Merchant Bank would see the group recovering its US$5 million tied down in the bank ever since it underwent curatorship. The curatorship was recently lifted after National Social Security Authority bought 84% in the bank.
“We will receive our money in tranches over the next 10 to 12 months and I don’t think there will be any problems in getting that money,” he said.
However, the group recorded a loss of US$371 433 as at the end of December 2011, a 68% reduction from the prior year’s figure.