Tsogo Sun Hotels sells its 50% interest in Seychelles asset
The financial web of Covid-19 keeps getting wider as economic woes in South Africa impact on Seychelles, and more specifically its Tourism industry. Tsogo Sun Hotels will sell its stake in United Resorts and Hotels, which has assets in the Seychelles in the form of Maia Luxury Resort, for R465m.
The group will use the R465m sale price to the Minot Hotels group, owners of Avani Hotel at Bar-barons, to help reduce its dollar-denominated debt.The money, which represents about a fifth of the group’s R2.3bn market capitalisation, will help Tsogo Sun Hotels reduce its debt. The hotel industry is struggling to survive amid the economic un-certainty brought about by the Covid-19 pandemic, which has brought the tourism industry to a standstill.At the end of March, the group had net debt of R3.3bn.
Tsogo Sun Hotels said that Covid-19 had limited the group’s ability to apply its cash resources to-wards the settlement of this debt. The group has been trying to reduce its dollar-denominated debt because of the high interest costs on it.
“The disposal consideration allows the group to achieve this objective and, accordingly, the company believes that it is in the best interest of the group to dispose of the assets at this time,” it said.United Resorts and Hotels owns properties and land on a leasehold basis at Anse Louis, Mahé Island in the Seychelles, including 30 luxury villas, known as Maia Luxury Resort and Spa.
Tsogo has been trying to manage the Covid-19 pandemic, which has been rampaging through SA’s hospitality industry since March, causing hotels and resorts to shut to avoid the spread of the coronavirus. Tsogo had to close its 103 hotels at the end of March because of the government-imposed lock-down. The government has since allowed hotels to open but under strict conditions. Tsogo Sun has since opened 30 hotels but with very low occupancy.
Tsogo Sun was broken into two parts in 2019 —Tsogo Sun Hotels and the gambling business, Tsogo Sun Gaming—which are now separately listed.
Source: businesslive.co.za