Business tycoon and Rainbow Tourism Group (RTG) single largest majority shareholder Nicholas van Hoogstraten says he will not support capital raising initiatives mooted by the hospitality concern until a forensic audit on the company’s debt is conducted.
Report by Mernat Mafirakurewa , Acting Business Editor
The group recorded a pre-tax loss of $2,3 million in the first six months of the year to June and is in desperate need of $15 million to recapitalise and to retire short-term debts.
It also plans to raise $5,5 million through a rights issue and $9,5 million through the sale of Bulawayo Rainbow Hotel to the National Social Security Authority. In May last year RTG took a decision to sell its non-core assets Touch the Wild Tourism Services Zimbabwe and Hathanay Investment to raise funds.
Van Hoogstraten told NewsDay last Friday that issues to do with the last rights issue were still pending at the courts.
“We cannot support the rights issue for a number of reasons. Firstly, we were defrauded at the last rights issue and the matter is still at the courts and has not been resolved,” he said.
“Secondly we want a forensic audit to determine how a company, which had no debt three years ago has now got a debt of over $20 million.
“Thirdly we want a guarantee on the money raised being used correctly and not just disappearing, as has been the case under the former board.”
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In the six months to June, the group’s short-term borrowings amounted to $12,6 million, while long-term borrowings closed at $10,6 million. As part of efforts to contain costs, RTG plans to layoff close to 200 employees at a cost of $80 000 within three months. The hotel concern has an estimated staff complement of over 1 000.
The group, which owns A’Zambezi River Lodge, Victoria Falls Rainbow Hotel, Bulawayo Rainbow Hotel, Kadoma Hotel and Conference Centre and New Ambassador Hotel has begun a head-hunting exercise to replace its former chief executive officer Chipo Mtasa.
