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Oliver Kazunga, Senior Business Reporter
HOSPITALITY concern, Rainbow Tourism Group (RTG) has raised $22.5 million through a rights offer and linked debentures to restructure its balance sheet and raise working capital.

In January, RTG shareholders announced that they had given the nod to resolutions that seek to raise $22.5 million through a rights offer of ordinary shares and linked debentures to settle its debt and raise working capital.

According to the Zimbabwe Stock Exchange, RTG announced on Monday that its shareholders had bought 56.52 percent in the rights offer and linked debentures that were aimed at raising the required capital. Debentures refer to a long-term security yielding a fixed rate of interest, issued by a company and secured against assets. Through the capital raising initiative RTG issued 625 million shares and 1.79 million linked debentures.

The total rights subscribed were 353.3 million while debentures were one million translating to 56.52 percent of the total rights offered and linked debentures.

“The rights offer shares and debentures will be issued and listed on the Zimbabwe Stock Exchange with effect from the 26th of February 2018,” said the ZSE.

The balance of 271.7 million shares, which reflects 43.48 percent, went to the underwriter. The capital raise initiative opened to members registered in the company’s books on the 31st of January 2018 and closed on February 22, 2018. Proceeds from the capital raise would be used to settle RTG’s $16.4 million debt owed to the State –run pension fund, the National Social Security Authority.

NSSA is the major shareholder in RTG. The $22.5 million capital injection will ensure RTG would be able to restructure its debts through $16.6 million in the form of debentures. The equity injection through the rights offer guarantees that the company’s overall liabilities will be reduced to $5.8 million.

Meanwhile, the hospitality group is aggressively looking for expansion opportunities on projected growth in room demand following the coming in of a new political dispensation. Under the new political administration, efforts are being made to ensure a conducive environment for investment is created as well as boosting various economic sectors including tourism. Zimbabwe’s tourist arrivals are expected to rise to 2.4 million from 2.3 million last year.

@okazunga