BH shareholders approve Rights Offer to fund hotel project

Blantyre Hotels plc has taken a significant step forward in its expansion plans by approving the issuance of 7 billion new ordinary shares at 5 tambala each.

This move is aimed at raising K62.4 billion to finance the completion of a new hotel project in Lilongwe, being executed through a Special Purpose Vehicle (SPV) called Oasis Hospitality Limited.

Speaking after the approval, Blantyre Hotels plc Board Chairperson, Vizenge Kumwenda, expressed satisfaction with the progress; “What this means is that the process of raising the K62.4 billion can now proceed.”

“The board will consult its transaction advisors, and once all necessary documentation is prepared, we will issue a prospectus. This will open the rights issue, allowing the public to apply for the shares, and we can begin the fundraising process.”

Kumwenda revealed that the SPV has already raised K19 billion, which has been used for the project’s first phase. However, the overall capital requirement stands at K88.67 billion.

He explained that K26 billion of this will be raised through foreign currency-denominated debt to ensure smooth procurement of construction materials.

The remaining K62.4 billion will be secured through the Rights Offer.

“We are aiming to have the project completed by December 2025,” Kumwenda noted, adding that while the initial timeline for completion was set for August 2025, logistical and cost-related challenges have caused delays.

“The objective remains to finish as soon as possible. Worst-case scenario, we hope for December 2025.”

Kumwenda emphasized that the Lilongwe project is a key part of Blantyre Hotels’ expansion strategy.

“Blantyre Hotels has long been a one-property company, and the board decided it’s time for growth. This hotel in Lilongwe is part of that vision,” – He said.

The chairperson elaborated on the investment structure, explaining that while Blantyre Hotels is the project’s primary sponsor, the SPV allows other investors, particularly those focused on property investments, to participate.

“It’s a common model globally, where property companies own hotels. Blantyre Hotels itself is also an investor and could hold a 70% stake in the SPV once the funds are raised.”

Looking ahead, Kumwenda also hinted at the possibility of Blantyre Hotels reducing its stake in the SPV after the project’s completion, allowing it to reinvest in other ventures.

“For instance, we could sell our stake in the Lilongwe property and use the proceeds to develop another hotel, possibly at the lake, while still managing the Lilongwe hotel,” – he said.

In response to questions about individual and corporate investor participation, Kumwenda assured that provisions have been made for broader investor involvement.

“We’ve been asked whether institutional shareholders will make room for individual investors. The answer is yes. In fact, Press Trust, one of the major shareholders, has indicated that it doesn’t intend to take up its full share allocation, providing an opportunity for individual investors to benefit from the hotel’s growth.”

James Mbigwa, General Secretary of the Financial Market Dealers Association – FIMDA, commended the decision to issue new shares, emphasizing its potential impact on the liquidity of Blantyre Hotels plc stocks on the Malawi Stock Exchange – MSE.

Mbigwa said; “This is a very strategic move that will undoubtedly enhance the liquidity of Blantyre Hotels’ stocks on the Malawi Stock Exchange.”

“With more shares in circulation, it becomes easier for investors to trade, which in turn increases market activity and investor interest.”

The project, originally envisioned as part of Blantyre Hotels’ expansion drive, marks a significant milestone in the company’s history, positioning it for future growth and diversification.