Stripping of hotel group's assets at African Sun?

African Sun, a leading hospitality group, has announced plans to divest the Great Zimbabwe Hotel in Masvingo and the Beitbridge Express Hotel to TD Hotels & Leisure (Private) Limited.

In a recent notice to shareholders, African Sun (ASUN) revealed that the two properties are no longer aligned with the group’s strategic vision. The Great Zimbabwe Hotel will be sold for a gross consideration of $4,445,000, while the Beitbridge Express Hotel will be disposed of for $2,500,000.

The decision follows a board resolution from March 22, 2024, where ASUN determined to sell the Great Zimbabwe Hotel, and the Beitbridge Express Hotel has been listed for sale since September 21, 2021. Negotiations for both properties concluded successfully, with the Agreement of Sale for the Beitbridge Express Hotel executed on July 18, 2024, and the Great Zimbabwe Hotel on August 15, 2024.

ASUN noted a significant turnaround in performance over the past three years following the COVID-19 pandemic. To support the refurbishment of its primary hotels and enhance capital-raising efforts, the board decided to sell assets not central to its future plans.

The Beitbridge Express Hotel was closed in early 2016 due to declining trading conditions, and the Great Zimbabwe Hotel has been a marginal contributor to the group's profitability.

TD Hotels and Leisure (Private) Limited has agreed to purchase the Beitbridge Express Hotel, located on Stand 583 Beitbridge Township, measuring 7.8339 hectares, for $2,500,000. The purchase price for each property will be paid in full into ASUN’s designated account within 45 days of signing the respective Agreements of Sale. The transactions are set to be effective from November 1, 2024.