Brainworks halts listing to beef up its books

JOHANNESBURG – Brainworks, the Zimbabwean-focused investment company, will prioritise beefing up its balance sheet with a view to making it more attractive to investors and has placed the listing on the country’s bourse on ice.

Brainworks, which became the first Zimbabwean company to have a primary listing on the JSE in October, postponed its plan to pursue a secondary listing on the Zimbabwe Stock Exchange this year, saying it would lodge an application for a listing next year.

“After considering the fact that Zimbabwe would be holding its harmonised elections in 2018 and the recent positive developments in the economic environment, the board has resolved to approach the regulator with a view to apply to deferring the initiative until 2019,” the company said in its annual report for 2017.

It said a plan to pursue a $15million (R188.48m) capital raising exercise to help reduce its debt topped its priorities this year.

“The contemplated initiative would involve approaching investors with a target to raise at least $15m that would be primarily deployed towards debt repayment at the company and Brainworks Capital Management levels,” the group said.

Brainworks also said that the restructuring of short-term debt would equally be prioritised.

“This would be achieved through lobbying for extended repayment terms with providers of all debt that is set to mature within the next 12 months.

“Should this strategy fail to yield the desired outcome, the group would seek to establish new long-tenured debt facilities from whom the short-term debt would be retired.”

The group also said that it had pinned its hopes on the firming of the business, and to boost international arrivals to its hotels, including the Victoria Falls Hotel.

It said post year-end “there are signs that the rand is firming, which is likely to positively influence on arrivals from South Africa”.

Market boost

Last year, Brainworks said that the weak rand against the dollar had resulted in flat room rates for its hotels.

“The rand relative to the dollar affected the South African market, which contributes significantly to tourist arrivals into Zimbabwe,” it said.

The company said the international market had grown 29% during the year under review.

The company said that it expected the tourism industry to continue growing this year and to benefit from key activities, which include elections, infrastructure development and other government projects.

It said that the group’s hotel reservations, particularly in Victoria Falls, were looking positive, adding that the Zimbabwean government was planning to introduce a number of measures to rejuvenate the tourism industry.

It expected that the momentum that is arising from the regime change which saw the election of Emmerson Mnangagwa in November and the resulting sentiment was expected to drive performance, particularly within the hospitality sector.

Mnangagwa went on a charm offensive, telling the world that Zimbabwe was “open for business” during visits to several countries, including South Africa, Zimbabwe and China this week.