Zimbabwe Hotel Group Unloading Assets to Pay Heavy Credit Line
Ibbo Mandaza, a former Rainbow chairman, said the group is financially solid, contrary to a recent report saying it is insolvent
Insiders said Rainbow's board and shareholders agreed to raise US$15 million through a US$10 million sale and leaseback of Bulawayo Rainbow Hotel to NSSA and a US$5 million rights issue Zimbabwe's Rainbow Tourism Group, unable to service a US$15 million credit line and declared technically insolvent by a private financial advisory firm, has resolved to sell one of its top properties to the National Social Security Authority. Insiders said Rainbow's board and shareholders agreed to raise US$15 million through a US$10 million sale and leaseback of Bulawayo Rainbow Hotel to NSSA and a US$5 million rights issue. They said the Eastern and Southern African Trade and Development Bank - also known as the Preferential Trade Area Bank - has threatened to take the Rainbow Group to court if it does not pay the debt in full. Rainbow management could not be reached for comment. Ibbo Mandaza, a former Rainbow chairman, said the group is financially solid, contrary to a recent report by analytical firm Corporate Excellence, that it is technically insolvent. “I am sure that the company is not broke and indications are that the deal with NSSA will take care of the debt,” said Mandaza. Economic commentator Masimba Kuchera said the hotel group is in a crisis due to government interference in its operations. The group owns top-class accommodations including the Rainbow Towers and New Ambassador hotels in Harare, and the Rainbow Hotel in Victoria Falls. Finance Minister Tendai Biti recently said the tourism sector is expected to record annual growth of 13.7 percent in 2012 compared with 10.3 percent in 2011.