City Lodge proposes R1.2bn rights offer
Covid-19 has hit revenue, though some hotels remained open for quarantined individuals, stranded tourists and essential service workers
Hotels group City Lodge is planning a R1.2bn rights offer, equivalent to its market capitalisation, as it battles cash flow difficulties due to the Covid-19 pandemic.
The group said it wanted to raise cash to meet its black empowerment obligations, repay corporate debt and help with a cash shortfall as a result of the coronavirus pandemic. The rights offer would also position the company for future growth, it said.
In afternoon trade on Monday City Lodge’s share was down 13.4% to R26.50, giving it a market capitalisation of R1.155bn.
City Lodge said that during SA’s lockdown the group had ceased operations at all 55 of its SA hotels, and ultimately all of the group’s 62 hotels were closed, initially generating no revenue.
Limited operating activities had since taken place, with seven of its SA hotels operating — three serving as quarantine hotels, two accommodating stranded tourists and two accommodating essential service workers.
On June 12, two were serving as quarantine hotels, and a further 21 hotels are open for stranded guests, essential services and business travel accommodation requirements, albeit at limited or low occupancies, the group said.