Hos­pi­tal­ity gets go-ahead to buy SSH port­fo­lio for R3.5bn

The res­o­lu­tion was backed by 100% of the share­hold­ers at the AGM yes­ter­day

The Star Early Edition - - COMPANIES - Sandile Mchunu

SHARE­HOLD­ERS of Hos­pi­tal­ity Prop­erty Fund gave the board the thumbs-up to ac­quire a port­fo­lio of prop­er­ties from South­ern Sun Ho­tel Prop­er­ties (SSH), a wholly-owned sub­sidiary of Tsogo Sun, for R3.5 bil­lion.

The res­o­lu­tion was backed by 100 per­cent of the share­hold­ers who voted in the gen­eral meet­ing that took place in Johannesburg yes­ter­day. About 94 per­cent of the shares were rep­re­sented at the meet­ing. De­spite the ap­proval, Hos­pi­tal­ity’s share price re­mained flat on the JSE. It didn’t move from Mon­day’s clos­ing price of R14 a share.

Hos­pi­tal­ity said it would also un­der­take a re­nounce­able rights of­fer to share­hold­ers in or­der to raise up to R1.8bn to fund the cash por­tion of the pur­chase con­sid­er­a­tion of the ac­qui­si­tion. The rights of­fer will open on July 24 and close on Au­gust 4. Tsogo Sun said the port­fo­lio to be ac­quired by Hos­pi­tal­ity con­sisted of 29 ho­tel prop­er­ties.

“The board of direc­tors has re­solved to un­der­take a rights of­fer to raise R1bn to fund the cash por­tion of the pur­chase con­sid­er­a­tion re­lat­ing to the ac­qui­si­tion. Fol­low­ing the an­nounce­ment the board has re­vised the rights of­fer quan­tum in or­der to mit­i­gate the risk of cash drag on share­hold­ers’ funds through ef­fi­ciently align­ing the re­ceipt of cap­i­tal raise pro­ceeds with the an­tic­i­pated tim­ing of de­ploy­ment thereof,” the group said.

The ac­qui­si­tion is not the first for Hos­pi­tal­ity this year. In April the group said it has en­tered into a pur­chase agree­ment with Sa­vana Prop­erty to ac­quire var­i­ous sec­tions and ex­clu­sive use ar­eas of the Sand­ton Eye sec­tional ti­tle scheme.

It also en­tered into an agree­ment with Sand­ton Isle In­vest­ments to ac­quire an ex­ist­ing real right of ex­ten­sion in the scheme (real right ac­qui­si­tion) in which it said it would pay R301.55 mil­lion for both ac­qui­si­tions.

Both pur­chases were clas­si­fied as a cat­e­gory 2 trans­ac­tion in terms of the JSE list­ings re­quire­ments and ac­cord­ingly will not re­quire the ap­proval of Hos­pi­tal­ity share­hold­ers.

The Sand­ton Eye ac­qui­si­tion in­cluded Hos­pi­tal­ity’s Radis­son Blu Gau­train Ho­tel, an up-scale ho­tel com­pris­ing 220 rooms, eight con­fer­ence fa­cil­i­ties, the Cen­tral One Restau­rant and bar, an out­door swim­ming pool and sun deck and a fit­ness cen­tre.

Tsogo Sun has also been ac­tive lately. In May the group said it was go­ing to spend an ad­di­tional R1.3bn to ex­pand the Sun­coast Casino and En­ter­tain­ment World in KwaZu­luNatal. The con­struc­tion com­menced in 2016, but was later in­ter­rupted and stopped due to un­ex­pected chal­lenges. How­ever, con­struc­tion re-com­menced in mid-June, with an an­tic­i­pated eigh­teen months to com­ple­tion.

PHOTO: REUTERS

Tsogo Sun said the port­fo­lio to be ac­quired by Hos­pi­tal­ity con­sisted of 29 ho­tel prop­er­ties.

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