Source: RTG clears Afreximbank, PTA legacy debts – NewsDay Zimbabwe May 8, 2017
Rainbow Tourism Group has liquidated its legacy debts with the African Export-Import Bank (Afreximbank) and PTA Bank from operating cash flows, an executive has said.
BY TARISAI MANDIZHA
The new management team inherited the debts in 2012 when it took office.
Speaking at the group’s analysts briefing last week, group CEO, Tendai Madziwanyika said the Afreximbank Bank debt was $7,5 million, while the PTA Bank debt was $3,5 million when his team came into office.
The $7,5 million Afreximbank facility was used to refurbish the group’s flagship hotel, Rainbow Towers Hotel and Conference Centre, while the PTA Bank facility financed the facelift of A’Zambezi River Lodge.
“Operationally, the company is now very strong. We have put closure to the legacy issues and we are ready to grow. The company is pushing so that there is a resolution to that Capital Bank story because $1,9 million of our capital is stuck in there. But the good news is despite not even getting that amount for it to work for us, we have managed to pay off Afreximbank and PTA Bank loans according to schedule from the robust operational cash flows,” Madziwanyika said.
He told analysts the company was now operationally sound, explaining that the $3,8 million loss incurred in 2016 arose largely due to the strategic decision to exit non-performing markets, namely Rainbow Beitbridge Hotel and Rainbow Hotel Mozambique.
Madziwanyika said the company was awarded a judgment by the Supreme Court of Zambia of $2 million from a case against Savoy Hotel with whom the group had a management contract.
The group’s revenue, which dropped by 11% to $24,1 million in 2016 from $26,9 million in 2015, was adversely affected by external factors in the second to third quarter of 2016.
Investment in international source markets paid off for the hospitality company as demonstrated by the 20% growth in foreign business inflows from $6,7 million in 2015 to $8,1 million in 2016 resulting in a contribution to revenue increase of 31% in 2015 to 33% in 2016.
Madziwanyika said the company was now operationally sound, having eliminated exposure from the non-performing markets. The group is set to save at least $1 million per annum from the exits, which will preserve value for shareholders, he said.
Madziwanyika said the company “is now leaner, more efficient and agile enough to quickly respond to market dictates”.
“Recent developments such as the opening of the new Victoria Falls International Airport and the connectivity to regional hubs such as Cape Town and Nairobi will definitely have a positive impact on our business and the tourism industry as a whole,” he said.