Darlington Musarurwa and Kudakwashe Mutandi
LISTED property concern Dawn Properties Limited, which has gradually come under the orbit of new investors under the Brainworks banner, has put some of its prime properties – Great Zimbabwe Hotel, Hwange Safari Lodge and the swanky Elephant Hills resort – under the hammer, with market watchers noting that the grand project of the new investors being led by businessman Mr Stewart Cranswick is coming full circle.
Brainworks Capital Management, through its subsidiary Lengrah Investments – fronted by Mr Cranswick – has, after a series of transactions, managed to acquire a 45 percent stake in African Sun (formerly Zim Sun Hotels) and 28,4 percent equity in Dawn Properties.
Dawn Properties, which was formerly a subsidiary of African Sun Limited (ASL), was de-merged from the group as investors sought to unlock full value from its properties.
With Lengrah strategically positioned in the two entities, market rumours suggest that they might be soon rebundled into a single entity. Mr Cranswick lost out on Zim Sun, which used to be a subsidiary of Delta Corporation when the hotelier, together with OK and Pelhams, was unbundled in 2002 following the reorganisation of the business.
The businessman, who had a key shareholding in the entity, subsequently sold his shares to a consortium, Tolenta Investments, then led by local businessman Dr Shingi Munyeza.
But it seems Mr Cranswick, who is brother to former African Consolidated Resources (ACR) boss Mr Andrew Cranswick, has turned the tables.
Apart from holding a 19 percent stake in Lengrah Investments, Mr Cranswick is now the vice board chairperson in ASL.
Last week, Dawn Properties issued a cautionary statement advising its shareholders to exercise caution when dealing with the company shares.
People familiar with the development claim that management had settled to dispose of non-performing assets such as Hwange Safari Lodge and Great Zimbabwe Hotel.
However, the proposed disposal of Elephant Hills Hotel, which is a key property, is proving contentious and a sticky point, the sources say.
Dawn Properties owns Hwange Safari Lodge in the Hwange National Park, Holiday Inn Mutare, Caribbea Bay Sun in Kariba, Elephant Hills Hotel in Victoria Falls, Crowne Plaza Monomotapa Hotel in Harare, Express Holiday Inn in Beitbridge, Great Zimbabwe Hotel in Masvingo and Troutbeck Hotel in Nyanga.
All the properties are presently being managed by African Sun.
The proposed sale of the properties under new management is now being questioned.
“Stewart Cranswick was the operator of Landela Lodges which were then closed due to viability constraints. He also acquired UTC, which was later disposed. Could this investment by Cranswick be another way of looking for assets to strip so he can sell them on at a future date when the market corrects? What is of interest is, on 26 March, Dawn issued a cautionary for a disposal of assets,” noted a well-placed source.
“Some market analysts suspect that this is a way of trying to pick up cheap assets in a depressed market for later disposal when the market turns for the better. Is this not the time to hold on to such assets until the current liquidity crunch improves?” asked the source who refused to be identified owing tof the sensitivity of the matter.
Dawn Properties chief executive officer Mr Justin Dowa would neither confirm or deny that they had put some of their properties for sale.
“That is not something that I can talk about at this point of time,” said Mr Dowa.
Recent developments seem to indicate that ASL and Dawn Properties will be rebundled in the short to medim term.
At an extraordinary general meeting (EGM) on March 21, ASL shareholders elected to dispose of 16,54 percent shareholding in Dawn to Lengrah Investments.
But the disposal of the shares was initially reversed by the ZSE on February 25, 2014, after the bourse noted that the deal first had to be formally approved.
African Sun subsequently published a retraction circular.
Last year, the ZSE ordered African Sun to republish its financial results after the group failed to provide a detailed account.
ASL claims that it has been selling its shares in order to reduce its debt overhang, which has accumulated since dollarisation.
It is believed that proceeds of the disposal will also reduce the gearing – defined as a company’s net debt- from the current 48 percent to 34 percent. Further annual interest savings of $975 000 are also being expected.
The target communicated by management in the December 2013 analyst briefing was to bring gearing to below 30 percent.
“African Sun seems to have taken a path to deal with major setbacks it was facing since the dawn of dollarisation, which were hotels that were overdue in refurbishments, an acrimonious relationship with Dawn, operating losses and high levels of borrowings which had put a huge question mark in its going concern. It appears the company has dealt with all these very successfully,” said a source.
“The debt restructuring transactions have been necessitated by Dr Shingi Munyeza, then the largest shareholder who swooped his shareholding in the venture capital outfit led by George Manyere, Brainworks Capital.
“Through its subsidiary, Lengrah Investments, in turn, now owns about 46 percent of African Sun with a pending offer to minorities. It is through Lengrah that two other funds have come in, namely Wallal and Mudhut. This has brought about board appointments, namely Stewart Cranswick, Timothy Nuy and Walter Kambwanji. From these appointments it appears Timothy Nuy represents ADC, who are a significant shareholder in Brainworks Capital, Walter Kambwanji represents Brainworks Capital and Stewart Cranswick appears to represent the other two funds,” added the source.
Mr Cranswick, who was believed to be in Australia last week, only said “I am not the one” in an unclear terse response to questions sent to him by e-mail.
There are, however, fears that Dr Munyeza, who is currently chief executive officer of ASL, might be eased out of the group by the clique of powerful businessmen that has gained a stranglehold on the hotel chain.
Sources claim that at the March 21 EGM, Mr Cranswick also made an audacious $1,2 million bid to buy out African Sun’s management, a claim that could not be independently verified.
Dr Munyeza has acquired the franchise for South African food outlet, Mugg & Bean, for the Zimbabwean market.
He told The Source that he acquired the franchise for the specialised coffee shop from South Africa’s Famous Brands under his family investment portfolio in May but opened the first outlet on November 1 in Harare.
He said he invested $400 000 in the project and planned to add three more outlets over the next year.
“We intend to expand this particular brand and others into the main economic centres. We plan to have three more Mugg & Bean outlets within the next 12 months and will see where demand takes us from there,” Dr Munyeza said.
Mugg & Bean also has a presence in Namibia, South Africa, Botswana, the United Arab Emirates and Saudi Arabia.
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