Minority shareholders for Malawi Stock Exchange (MSE)-listed hospitality chain, Sunbird Hotels plc, have reiterated the need for immediate recapitalisation of the business and have the government offload most of its shares.
This was the general outcry at the firm’s 30th annual general meeting (AGM) in Blantyre on Friday.
The shareholders are desperate to see the government, which holds 71 percent stakes in the hotel through a holding company, MDC, have its hands off the business.
They [shareholders] insist that doing so would help improve the business’ stand in the wake of stiff competition on the market.
“They [the government] are holding Malawians to ransom. The only exit strategy is by use of rights issue where the government must not participate. It is obvious that taking time in business is a cost and now is the time for the government to concentrate on its core activity,” one of the shareholders, Joe Maera, said.
Another shareholder, Frank Harawa, said reducing the government’s shareholding would help secure cheap capital to boost the business.
Speaking in an interview on the sidelines of the AGM, Sunbird Board Chairperson, Phillip Madinga, said the board has been engaging the government on the same.
“We have had several discussions with the government but I guess it is a question of timing in terms of when the government would want to do that,” Madinga said.
He said the firm is now financing some of its projects using other avenues including bonds issuance.
Madinga said considering positive performance of the business and share prices, now at K150, taking 71 percent of the government’s shareholding would be in excess of K20 billion.
Secretary to the Treasury, Ben Botolo, said the State remains committed to seeing its stakes offloaded systematically in the near future.
“We can easily take out 20 or even 40 percent of the shares and offload. But we do not want a situation where, after that, performance of the business drops. We would not entertain that situation. We would want to make a decision that, even if we went, the risks that would arise would be best handled by the potential shareholders,” Botolo said.
The company announced an 82 percent increase in its profit after tax, from K1.3 billion in 2016 to K2.4 billion in 2017.
The rise in profitability is attributed to revenue growth, which went up by 21 percent to K18.9 billion in the year under review, from K15.7 billion in 2016.
The firm declared a final dividend of K165 million, or 63 tambala per share, to bring total dividends paid for 2017 to K238 million or 92 tambala per share.
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