African Sun says it has cancelled the sale of two underperforming hotels, Great Zimbabwe Hotel and Beitbridge Express, but will go ahead with plans to sell off other assets.
The company announced last month that it had agreed a US$7 million deal for the two hotels. Great Zimbabwe Hotel, one of its least profitable operations, was to be sold for US$4.45 million, while Beitbridge Express Hotel, which has been shut down since 2016, was to go for US$2.5 million. The deal was with TD Hotels, a company tied to former central bank governor Gideon Gono.
But African Sun says it has cancelled that transaction.
“The Board advises of the termination of the previously announced agreements with TD Hotels & Leisure (Private) Limited, classified as a Category 3 transaction,” African Sun says. No reasons were given. A category 3 transaction is when a deal is not big enough to need shareholder approval.
Conditions of the cancelled deal had set September 30 for approval from exchange control and the Competition and Tariff Commission. The buyer was to pay the full amount within 45 days of the signing of the respective Agreements of Sale, setting 1 November 2024 as the deadline.
While the deal for the two hotels is off for now, African Sun is still looking to sell other assets, the company says in a new notice released on Friday. These will be Category 1 transactions, which need shareholder approval.
“Further to the cautionary statement dated 10 September 2024, shareholders and the investing public are advised that in keeping with the strategy of unlocking value, negotiations for the disposal of a selection of hospitality assets are ongoing,” said African Sun.
Hotel industry players say African Sun may sell the Monomotapa Hotel, which has attracted interest from two hotel brands Legacy and Protea. Also likely on sale is Caribbea Bay in Kariba.
African Sun co-runs the Vic Falls Hotel with Meikles, which has announced its own plan to sell a key asset. It is believed that Meikles is discussing the sale of its 50% share of Vic Falls Hotel to Albwardy, the Dubai investor that bought the Meikles Hotel in 2019.
In the half year to June, African Sun reported a 14% increase in revenue to US$25.6 million. This was driven by firmer Average Daily Rates of US$112, an increase of 9% from the first half of 2023. Hotel occupancy across the group closed the half year at 50%, a four percentage points increase compared to the same period last year.
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