HARARE – Brainworks Capital (Brainworks) — through its subsidiary Lengrah Investments (Private) Limited (Lengrah) — has increased its shareholding in African Sun Limited (African Sun) to 43 percent from 32 percent.
This follows the financial advisory firm’s acquisition of 42,3 million African Sun shares under a special bargain last week.
The hotelier is currently trading under caution pending a mandatory offer by Brainworks to buy out minorities.
Shingi Munyeza, African Sun’s chief executive and also a shareholder in Brainworks, confirmed the transaction, adding that the investment vehicle was aiming at increasing its shareholding in the hospitality group.
“We want to accumulate as many shares as possible. Our aim is to grow our value in African Sun,” he said.
This comes as last month Brainworks acquired a 32 percent stake in African Sun in a deal which saw Munyeza’s family investment vehicle Nhaka Trust getting 17,02 percent shareholding in the former.
This was followed by an announcement that African Sun’s 12 percent shareholding in properties firm Dawn was bought by Brainworks.
The 294 705 134 shares were disposed of at a 53 percent premium from the last trading price at 1,47 cents.
The shares worth $4,3 million were sold to Lengrah, a hotel and real estate investment company incorporated in Zimbabwe.
The disposal was undertaken solely for the purpose of reducing short-term debt, pursuant to the African Sun’s strategic thrust of strengthening the group’s capital structure as communicated previously.
Brainworks also acquired a beneficial shareholding in African Sun through numerous investment vehicles.
The disposal has triggered a mark down of the entire class of the shares held, which could potentially result in a charge of $8,77 million to the Income Statement for the year ended September 30, 2013, subject to further assessment of the value-in-use of this investment.
The company will however, remain a holder of 406 466 976 Dawn shares, constituting 16,54 percent with a value of $4,06 million.
Brainworks arranged the financing to acquire the 12 percent stake.
These shares were acquired as a pre-emptive measure to help resolve tenancy issues with Dawn.
Significant progress has been made in this regard and a cordial business relationship now exists between the two entities.
The benefit of disposing the shares to Lengrah is the fact that the major shareholder of the holding company — Brainworks — is African Development Corporation (ADC), which will assist with capital raising for African Sun as well as positioning the hospitality group to tap into international markets.
Brainworks, through its anchor shareholder, ADC, intends to list either on the Frankfurt Stock Exchange or the Toronto Stock Exchange.