Malawi Stock Exchange-listed Blantyre Hotels Limited (BHL) has set an ambitious target to raise over K62.4 billion through rights offer for completion of construction of its Lilongwe Golf Hotel.
The firm, which owns Protea Hotel by Marriot in Blantyre, has since called for an extraordinary general meeting early next month to seek shareholders’ approval for a capital restructuring and the rights offer.
In a statement, BHL says among the agenda items, the meeting will discuss a proposal to increase the company’s authorised share capital to K500 million, divided into 10 billion shares with a par value of 5 tambala each.
The company also seeks to issue a rights offer of up to 7 billion new ordinary shares on a pro-rata basis.
The firm is putting up a 180-bed gold estate hotel at Lilongwe Golf Club.
When completed, the new hotel will be operated under a management agreement with Marriott International and will carry the brand name ‘Protea Hotel by Marriott’.
It says raising the funds would enable construction works to be completed by August next year.
“If the said capital is raised, the company will have realised the means for completion of a hotel property in line with its business expansion and growth strategy,” reads the statement.
Stock market analyst who also sits as a Director at the Minority Shareholders Association of Listed Companies Board, Brian Kampanje, said increasing the company’s share capital entails raising cash from internal sources.
“By increasing capital and undertaking the rights issue, the company will find adequate resources to complete the project without incurring further interest expenses and foreign currency losses like are the current scenario.
“The shareholders should expect meaningful dividends once the Lilongwe hotel is fully operational,” he said.
He said while the financial performance of the company has not been solid, its brand name and history have been attractive to prospective investors.
According to Kampanje, Lilongwe Hotel Project is a game-changer as it will offer superior experience to those who have been looking forward to having Ryalls Hotel in the Capital City.
Stockbrokers Malawi Limited Equity Research Analyst Kondwani Makwakwa said broadening its hotal chains is an ideal growth path for the listed company. .
“Building a second hotel should help them make more profit by reaching new customers and competing better. The company sees issuing more shares as a better financing option than borrowing because it won’t leave them with the obligation to repay interest and principal.
“For the public, this is an opportunity to own shares in the hotel. The new share issue will increase the availability of the stock on the market. In the past, many people wanted to buy the stock, but there wasn’t enough supply. This move will benefit both the public and the market by making the shares more accessible,” Makwakwa said.
