Sun International shareholders have applied for 94.52 percent of the shares that were on offer as the hotel group seeks to raise capital to stay afloat during the Covid-19 pandemic, which has decimated the tourism and hospitality sector in South Africa.
The company, which owns iconic hotels like the Sun City Resort, announced on Tuesday evening that it received applications for over R1.1 billion of the rights offer shares.
The company was looking to raise R1.2 billion by issuing just over 127 million ordinary Sun International shares. It offered the shares at R9.44 per share, a 25 percent discount on the 30-day average price at which the company traded on the JSE when the offer was made.
READ | Hit by Covid-19, Sun International rolls out R1.2 billion rights issue
Sun International said the underwriters to the rights offer would also take up shares.
Other hotel groups such as City Lodge have also gone the rights offer a route to cope with losses suffered as a result of the pandemic. In City Lodge’s case, the rights offer is the first equity capital raise since the company listed on the JSE in 1992.
…Hit By Covid-19, Sun International Rolls Out A R1.2 Billion Rights Issue
In a notice to shareholders recently, the hotel group – which is facing a significant debt challenge – said the capital would help it “position itself for the resumption of the full trading post of the Covid-19 lockdown”.
With hotels and casinos forced to close across the country, the company was obliged to shut doors in late March following restrictions imposed by the government to fight the spread of the virus.
The board announced that the company would embark on a rights offer to raise approximately R1.2 billion which will improve the “company’s liquidity and strengthen its balance sheet”.
The company’s market capitalisation stands at R1.7 billion.
Full-year financial results in March showed that the company, which operates hotels and casinos in South Africa and Latin America, had snipped its debt burden from R9.2 billion to R8.8 billion, as key holiday establishment came under pressure from slow consumer spending.
It’s a premier resort, the Sun City, recorded a -6 percent decline in income.
The hotel and accommodation industry has been hit hardest by the current lockdown, with companies in the sectors warning that the prolonged shutdown would devastate operations and force job cuts.
In a different notice, City Lodge said it had been granted a R200 million by its investors, in addition to its undrawn facility, in what would ensure liquidity.
Hotels remain closed under the current alert level 3, with no indication when the sector might be allowed to operate again.
Source: news24.com
Comments are closed.