Shareholders of Cresta Marakanelo have overwhelmingly voted in favour of acquisition of several property assets around the country, which are expected to cut down on rental the company pays to landlords. Present at the meeting were shareholders who hold 98,8 808, 924 shares, representing 75, 6 percent of the shares eligible to vote at the meeting and 53,4 percent of the total issued share capital of the group.
Last Thursday, scores of shareholders at the extra ordinary general meeting held at Cresta Lodge gave the company the leeway to enter into a transaction in terms of which it will acquire Tribal Lot 141, Maun. The above land currently houses the Cresta’s Rileys Hotel. The property, which is currently rented by hospitality group, is currently owned by Botswana Hotel Development Corporation (BHDC). The latter is a subsidiary of government’s investment arm, Botswana Development Corporation (BDC).
A circular to shareholders seen by Botswana Guardian puts the price tag for the above asset at P 25million.
According to the group which is headed by Mokwena Morulane, shareholders have also given directors the nod to acquire Plot 50719 Gaborone (Cresta Lodge), Plot 6384 Francistown (Cresta Thapama), Plot 1169 Gaborone (CrestaPresident) and a portion of Plot 276 Selebi Phikwe (Cresta Bosele). All the above properties are owned by Letlole la Rona Limited, a Botswana Stock Exchange (BSE) listed company. The above properties are expected to cost P235 million.
Cresta, which has lately not improved its profitability, is expected to fund the acquisition through debt. In a brief interview on Wednesday, Managing Director, Mokwena Morulane said they are content now that the shareholders have passed the resolution as the acquisition is in line with their strategy. Ahead of the extra ordinary meeting, the board which is chaired by Moatlhodi Lekaukau has pleaded with shareholders to vote in favour of the proposed acquisition for a number of factors.
“The Board believes that the future growth and sustainability of Cresta will be enhanced as a consequence of the acquisitions, as provided for in the Acquisition Agreements and recommends that Shareholders vote in favour of the ordinary resolutions necessary to approve and implement the Acquisitions. The director holding Cresta shares intends to vote in favour of the transaction,” reads a circular from the board.
All things being equal, Cresta will no longer be liable for the 8% annual rental escalations, which are adversely affecting the profitability of the Company, if the deal gets the approval nod from BSE and Competition Authority. The rental increase for 2019 will amount to P2.5 million for the properties, resulting in annual lease rentals of P34.1 million.
“Acquiring the Properties gives Cresta security of tenure beyond the remaining 18month lease term and allows the Company to invest in refurbishing the hotels to defend and increase its position in the market,” said Cresta.