The incessant shareholder battles to control Rainbow Tourism Group (RTG) have left the hotel chain bruised given that it operates in a fragile industry which is sensitive to negative publicity.
A storm is already brewing ahead of the group’s forthcoming annual general meeting (AGM) set for June 29 as battle lines have been drawn between majority shareholder Nicholas van Hoogstraten and Econet Wireless over the appointment of board members to the country’s second-largest hotel group by the former.
Van Hoogstraten has already threatened to expose the country’s largest telecommunications company by subscribers, assets and earnings for alleged “fraud” at the AGM if he “does not get his way”.
Insiders this week told NewsDay that it was in the best interests of warring parties to find a lasting solution in order to bring stability to the hospitality group.
“There is no way the market value of RTG would go up with all the negative publicity going on. In as much as the company is not facing financial problems, the negative publicity it continues to receive portrays the hotel group in bad light,” an insider said.
“Instead of spending time developing key strategic instruments to take the hotel forward, this has not been so given that shareholders are failing to agree.”
After RTG’s suspension from the bourse, CEO Chipo Mtasa wrote to the Zimbabwe Stock Exchange expressing concern on the impact of the decision to the group’s operations and the potential negative impact on occupancy levels.
“The reports in the media insinuate that RTG had been suspended because of fraudulent activities at the company, now threatening its commercial viability. We have never received information regarding any investigations into financial irregularities at Rainbow,” read the letter in part by Mtasa.
During the week RTG was suspended from the bourse its market capitalisation was $39 while its share price was trading 2,4 cents.
As of Monday this week RTG’s market capitalisation was $36,2 million with the share price trading at 2,2 cents.
In a recent statement rebutting media claims on the soundness of the company, RTG said the company was not in any “financial crisis” as it was trading normally and is expecting to record a profit and increase occupancy levels in its rooms by December 31.
The bone of contention stems from Van Hoogstraten’s desire to appoint four representatives to sit on the RTG board.
He accuses financially troubled Patterson Timba of conniving with Econet and the National Social Security Authority to block his appointees.
According to a recent notice to shareholders of RTG, “at the instance of a notice received from various individuals or companies controlled by or related to the Hamilton and Hamilton Trustees Group, it is proposed that Messrs S Chibanguza, A S Hamilton, M R Hamilton and I Haruperi be appointed as directors of the company by a single resolution”.
Econet recently appointed Tracy Mpofu as RTG board chairperson, Krison Chirairo, John Gould and S C Vera as non-executive directors.
The appointments have to be confirmed and passed at the AGM where Van Hoogstraten has promised a showdown.
“If my appointed directors are defrauded again of their rightful positions we will call for an EGM (extraordinary general meeting) and expose their self-serving and dishonest history back to the 2005 fraud,” van Hoogstraten said.