New Mauritius Hotels shareholders approve bonus & rights issue to reduce debt
New Mauritius Hotels received shareholder approval for a bonus issue in order to improve its liquidity position and a rights issue totalling Rs 1.77 billion in order to reduce its debt level which had accumulated upon major projects being undertaken since 2007 in Trou aux Biches, Les Salines and in Morocco’s Royal Palm Marrakech. (Image:Beach Comber Hotels)
Mauritius-based hospitality major New Mauritius Hotels (NMH) is setting out to get its finances in order after being heavily indebted since 2007, triggered by huge investments in numerous large-scale projects in Trou aux Biches, Les Salines and in Morocco’s Royal Palm Marrakech.
In an official communiqué released on May 26, 2015, NMH has confirmed that its shareholders have unanimously approved the bonus and rights issues by way of ordinary resolutions.
Therefore, NMH will now go ahead with the issue of 322,847,072 new bonus Ordinary Shares in the proportion of two new Ordinary Shares for each Ordinary Share and a rights issue of 161,423,536 redeemable convertible non-voting Preference Shares yielding cumulative dividend at the rate of 6% p.a. at an issue price of Rs 11 each to the shareholders of the Company in the proportion of 1 preference share for every three Ordinary Shares after the Bonus Issue to be held on Friday, 12 June 2015.
Friday, June 12, 2015, will be the first day of listing of Bonus Shares. Next, June 29, 2015, will mark the opening of the rights subscription period and the rights issue trading will be held from July 6 to July 10. Preference shares will then be traded on August 10, 2015.
The financial restructuring will help NMH to reduce its financial burden and improve its cash flow situation.
To provide a context, the company is undertaking a Financial Reengineering program, totalling Rs 7.5 billion, to alleviate cash flow pressures of the company over the next three years.
This is being done first, through an injection of Rs 1.75 billion (net proceeds) by the Shareholders in the form of Preference Shares.
Secondly, a rescheduling of existing bank loans to longer term tenors in order to better match the company’s cash flow with the repayment profile of its loans (impact of circa MUR 3 billion over the next 3 years).
Thirdly, the company is issuing secured corporate bonds through a private placement in FY15 (EUR 20 million) to be repaid over a period of 4 years, the purpose of which is to refinance the portion of existing bonds arriving at maturity in FY15 ; and
Finally, strategic initiatives aimed at leveraging the Group’s asset base in order to generate additional cash of at least Rs 2 billion over the next 3 years. These initiatives include sale and leaseback, Invest Hotel Schemes, joint ventures and asset disposals.
For the first semester ended March 2015, NMH recorded an increase of 10.1% in revenue which amounted to Rs 5.4 billion while profit amounted to Rs 799 million. Geography-wise, Mauritius is the main revenue and profit driver, but the Morocco operation continues to pose challenges.
The finance cost of the entity for the period under review stood at Rs 417.5 million and total borrowings as at March 2015 stood at Rs 16.6 billion.
In the latest Beachcomber news release, Marcel Masson, the financial director of the group, explained that the financial expenses have led to debt obligations which, in turn, have exerted strong pressure on the group finances, triggering a vast program of financial restructuring aimed at considerably reducing the debt burden by September, 2019.
Besides, the financial restructuring also involves a rights issue that MCB Stockbrokers Ltd will underwrite. Accordingly, MCB Stockbrokers Ltd will subscribe for, or procure, all preference shares not taken up by the shareholders. As at this date, the Board has received an indication from the company’s major shareholders (totalling circa 35% of the Company’s share capital) that they can subscribe to approximately Rs 1 billion of preference shares, including excess preference shares.
If you want a copy of the prospectus, click here.
About the company:
New Mauritius Hotels Limited, incorporated on 24 December 1964, is a public company listed on the Official Market of the Stock Exchange of Mauritius Ltd.
The company owns and operates eight resorts in Mauritius, one in Seychelles and one in Morocco under the Beachcomber brand, totaling 2,063 available room keys as at 30 September 2014.