By our staff INDUSTRIALIST, Joseph Kanyekanye, was elected to chair the Rainbow Tourism Group (RTG) board at a meeting of directors on Tuesday. The board meeting — the first time directors of the country’s largest hospitality group sat after last year’s stormy meeting of shareholders — was cordial, Kanyekanye told Standardbusiness on Thursday.
Kanyekanye said the board unanimously agreed that the group had to be recapitalised and that all other issues would be addressed once that stage had been passed.
The group has to appoint a substantive chief executive, after Chipo Mtasa — a constant target by one of the shareholders — resigned early this year to pursue personal business.
RTG is in need of recapitalisation to retire expensive short-term debts. The US$15 million recapitalisation plan proposed by the group, has been on the cards for years, but would not proceed due to differences among shareholders.
The shareholders finally agreed to end the impasse, culminating in Tuesday’s board meeting, in which two major shareholders —National Social Security Authority (NSSA) and Nicholas van Hoogstraten — appointed three people apiece on the board.
NSSA is represented by Kanyekanye, Rosa Dube and Shadreck Vera. Shingirai Chibanguza, Ian Haruperi and EFE Securities boss, Edgeton Tsanga, represent van Hoogstraten on the RTG board.
Tourism and Hospitality Industry permanent secretary, Sylvester Maunganidze represents government’s interest on the board. The appointments of the directors are effective July 4.
Godfrey Manhambara, Elliot Nyoni and Trynos Kufazvinei, resigned from the RTG board on July 4.
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Kanyekanye said the board agreed to meet monthly until the group holds its meeting of shareholders.
He said the board discussed the issue of short-term debts weighing the company down.
Short-term borrowings have led to commensurate high finance costs negatively impacting on 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 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.
Kanyekanye said the refurbishment of the group’s hotels and the completion of the hotel in Beitbridge would create the ambience and help in the improvement of RTG’s cash flows.
Asked how he felt about chairing an organisation that had not had a board meeting in over a year, Kanyekanye said RTG “had passed that stage”. “Corporate governance is what most of us take quite seriously. Shareholders want return on their investments and we are cognisant directors have certain fiduciary responsibility,” he said.
Analysts say RTG’s recapitalisation would now start if Tuesday’s board meeting was anything to go by.
After fighting to have board representation for years, van Hoogstraten finally got his way with three directors for his 36% shareholding of RTG.
The loser was RTG since it did not have policy direction from the board which was not sitting. This meant corporate governance was being butchered. It was ironic that an organisation that was supposed to exude hospitality was a theatre of fights.
The new board says the dark past would never happen again.
