Paul Nyakazeya, Group Digital Editor 
Rainbow Tourism Group’s flagship: The Rainbow Towers Hotel in Harare
RAINBOW Tourism Group (RTG) yesterday announced that it had paid the first interest payment for the debentures that were issued in February.
A debenture is a medium to long-term debt instrument used by large companies to borrow money, at a fixed rate of interest.
RTG had increased the par value of its debentures in a bid to consolidate them. The consolidation was aimed at making the debentures easily tradable on the local equities market’s trading system.
“Notice is hereby given that Rainbow Tourism Group Limited paid the first interest payment for the six month ended 21 August 2018 relating to the debentures that were issued on 21 February 2018,” Napoleon Mtukwa, RTG’s company secretary said in a statement to shareholders yesterday.
In January, RTG’s announced a rights and debenture offer aimed at raising $22,5 million. The exercise received a 57 percent subscription. The offers sought to mobilise capital to settle its debt and focus on long-term operations.
The hospitality group was aiming raise the capital after putting up 625 million shares on offer while debentures amounted to 1 974 354 839.
“The payment was made on 21 August 2018 at a rate of six percent per annum in line with the debenture terms and conditions,” Mtikwa said.
Prior to shareholders approving the offer, RTG had said the funds would be used to retire its debt of over $16,4 million owed to the National Social Security Authority, which is the largest shareholder in the group with a 60 percent stake. British investor, Nicholas van Hoogstraten, is the second largest shareholder with 33 percent.
The debt has been weighing down RTG’s financial performance. The restructuring of the company’s outstanding debts will see the group reduce its gearing ratio, which has remained high over the past six years.
The company is targeting to reduce its gearing ratio to below 25 percent by year end from 68 percent. The gearing ratio peaked at 75 percent in 2012 but retreated to 66 percent and 65 percent in 2013 and 2014 respectively, before increasing to 66 percent in 2015 and further up to 68 percent in 2016.
RTG also sought to pay up facilities it accessed from local banks and statutory obligations. The group posted an after-tax loss of $4, 7 million for the year to December 31, 2017 up from a loss of $29 304 recorded in the prior year.
The widening loss was largely on the back of decline revenues and retrenchment costs.
