Mauritius’ Constance Hotels to issue rights shares for financing loan repayment
The hospitality major is offering 45,688,895 new ordinary shares with a par value of Rs 10 each at an issue price of Rs 27.00 per share to existing shareholders, fully payable on application, to inject fresh capital into the company. (Image: Constance Hotels)
Mauritius-based hospitality major, Constance Hotels Services Ltd (CHSL), will issue new ordinary shares, under a rights issue of Rs 1.23 billion to existing shareholders, in an attempt to strengthen the balance sheet of the company and enhance shareholder value.
The purpose of the rights issue is to repay temporary loan facilities and finance the anticipated capital requirements in its associates operating in the Seychelles.
The group’s performance has been adversely impacted due to global economic crisis which has aggravated inherent issues affecting specific markets in which it operates and occasioned delays in the launch of certain projects.
Accordingly, to inject fresh capital into the company, the hospitality major is offering 45,688,895 new ordinary shares with a par value of Rs 10 each at an issue price of Rs 27.00 per share to existing shareholders, fully payable on application.
As at October 14, 2014, the stated capital of CHSL is made up of 63,964,454 fully paid up ordinary shares.
Upon completion of the rights issue, CHSL is expected to have a stated capital made up of 109,653,349 ordinary shares.
According to the document issued by the Board, all the new ordinary shares shall be in registered form and the register shall be maintained by ECS Secretaries Ltd and the shares shall be in either certificated or dematerialized form.
The shareholders of CHSL, who are registered at close of business on November 24, 2014, shall be entitled to subscribe for five new ordinary shares for every seven shares held at that date.
On the other hand, shareholders who do not wish to subscribe for any or part of the new ordinary shares offered under the rights issue may trade their subscription rights by completing and signing Form B.
Since 2007-2008, CHSL had gone in for business expansion, mostly financed by bank loans and temporary facilities, and cash flows generated by the group.
The key achievements of the group have been: the opening of three new flagship properties; Constance Halaveli, Maldives, Constance Ephélia, Seychelles, and Constance Moofushi, Maldives; doubling the room count for both owned and managed properties to reach approximately 1,000 rooms; extending the marketing reach with focus on non-traditional markets; and developing a focused brand positioning strategy.
MCB Stockbrokers will serve as underwriter and subscribe for, or procure the subscription of all new ordinary shares of CHSL issued under the rights issue, which have not been subscribed for by the shareholders.
The board also made it clear that CHSL will not issue fractional shares, so the number of new ordinary shares will be rounded down to the nearest integer when fractions occur, and the difference will be subscribed by the underwriter or those nominated by the underwriter.
The board advised that incomplete applications will be rejected and these shareholders will be deemed to have renounced their rights to their allotment of the new ordinary shares under the rights issue.
A special meeting will be held on November 5, 2014 to obtain approval from the shareholders of the company for the rights issue.
The rights may then be negotiated through one of the licensed investment dealers and traded on the DEM from December 2, 2014 to December 8, 2014. The shares will be allotted on 29 December 2014 and listed and traded on the DEM as from 13 January 2015.
Consistent with its long-term vision of operating a number of quality hotels in the region, CHSL will, in due course, continue with its diversification strategy and intends to look at more opportunities for expansion as and when they arise, with a focus on Middle East, Africa and Asia.
Consequently, CHSL aims to leverage its management expertise, recognised by the industry, to secure additional opportunities.
Additionally, the group is benefiting from the investments made in its brand and will continue investing with the aim of becoming the brand of reference for the Indian Ocean.
Recently, the group was recognized as the top small luxury hotel brand in a 2014 report by ReviewPro, which is considered a leading independent provider of online reputation and social media analytics for the hospitality industry.