BHL seeks shareholders bailout to service a K4bn bank loan
Used as a collateral in a K4 billion loan - Ryalls Hotel
The Blantyre Hotels Plc (BHL) is seeking special funding from shareholders to service a K4 billion loan whose collateral is its only Hotel –Ryalls.
The National Bank loan facility was obtained to finance construction of another Hotel in Lilongwe (Oasis hotel) but Covid-19 effects have affected the company’s ability to settle it timely.
In a statement, board chairperson Emily Makuta said total cost for the Oasis project is US$46.3 million (K47bn) of which BHL subscribed to the equity by putting in K4 billion.
“In order to participate in the equity raise of Oasis, BHL obtained a facility of K4 billion from National Bank of Malawi plc (NBM). The facility had a moratorium of two years and the first repayment was due on 28 April 2023.
“The moratorium has since been extended and the first repayment which is for the accrued interest and the first principal repayment is now due on 31 August 2023.
“The facility is secured with a charge on the Ryalls Hotel property, which is currently valued at K8.8 billion,” reads the statement.
Initially, the hospitality firm announced plans to raise funds through the rights issue (an opportunity for existing shareholders to buy extra shares) but the process was postponed due to prolonged covid-19 effects.
The postponement of the rights issue and the late commencement of the construction project, according to Makuta, have impacted BHL’s capacity to service the NBM facility.
She said to fund BHL’s current commitments on the NBM facility and the Lilongwe hotel project, the board resolved to approach BHL’s significant shareholders to provide a shareholders’ loan.
“In this regard, the Board of Directors propose that the shareholders approve a shareholders’ loan of up to K4.2 billion which will be advanced by NICO Life Insurance Company Limited and Africap LLC –providing K1.11 billion and K1.0 billion, respectively.
“BHL will obtain the loan in tranches and the first tranche will amount to K2.11 billion, which will be channeled to the commitments on the NBM facility.
“The balance of K2.09 billion will be accessed by 30 June 2024, to meet the commitments of the Lilongwe hotel project,” the statement reads.
Meanwhile, Minority Shareholders Association of Listed Companies (MISALICO) is expressing concern over the company’s situation which is affecting share value.
MISALICO secretary general Frank Harawa said; “we are monitoring what is happening at Blantyre Hotels but we have not been given a chance to hear from the board though we are eager to raise it during the fourth coming Annual General Meeting.
“This situation is affecting the performance of the company at the stock market as the share value stagnated at around K10 per share. For a company with only one property (Ryalls Hotel), we think the situation is scarring.” He said.
Blantyre Hotels Plc posted a loss of K136 million in first half of 2023 compared to K752 million same period last year.
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