Under a rights issue existing shareholders are given new shares to buy pro-rata to their shareholdings.
Shareholders can follow their rights through buying the shares. If they do not follow their rights, an underwriter will snap the remaining new shares.
In a statement accompanying the group’s interim results, Tracy Mpofu, RTG board chairperson told shareholders RTG had never been recapitalised since dollarisation and is relying on short term borrowings for working capital requirements.
“The group requires recapitalisation for the purpose of completing the projects and retiring short term debt. This will be done through a rights issue which is anticipated to raise approximately US$15 million,” Mpofu said.
RTG is sprucing up its properties to attract guests into the hotels.
RTG recently completed refurbishment at the A’Zambezi River Lodge and the hotel was opened to the public on May 18.
The refurbishment cost US4, 8 million. Of that amount US$1 million came from internal resources while the balance came through a long term loan from the PTA Bank.
Mpofu said refurbishment is underway at the Rainbow Towers Hotel and Conference Centre. She said work on the outstanding guest rooms will commence once the group got its US$5, 2 million trapped in ReNaissance Merchant Bank (RMB).
RMB is currently under curatorship after being ripped apart by the founding directors, Patterson Timba and Dunmore Kundishora.
Ironically, Timba is a former chairman of RTG and could have influenced the use of RMB as a conduit for RTG’s loan from PTA Bank.
In its results for the half year ended June 30 2011, RTG recorded an increase in turnover to US$13, 8 million up 32% from the same period last year.
Occupancy levels rose marginally to 41% from 40% in the same period last year.