Nicola Mawson

Consumer Industries Correspondent

SHAREHOLDERS of hotel group City Lodge will be asked to sell back shares at R76 when they meet to sanction the group’s proposed empowerment deal.

The company said last week it would sell 15% of its equity to empowerment groupings for R485m.

Shareholders would be asked to vote in June on the deal, which will see a staff trust being formed to acquire 6% in the company, adding to the 1,7% staff have owned since 1995.

In addition, the University of Johannesburg’s School of Tourism and Hospitality will acquire a 3% stake and empowerment company Vuwa will get a 6% stake.

Two-thirds of shareholders will have to vote in favour of the deal, which will see shareholders sell back 15% of their shares at R76,06, the 10-day volume-weighted average price.

City Lodge traded 0,4% lower at R74,76 on Thursday. Nonexecutive chairman Hans Enderle said the deal would contribute towards developing future skills.

He said 10% of dividends due to the school would fund bursaries, which City Lodge hoped to benefit from as candidates qualified. In future, dividend flow could be used to fund capital projects.

Funding will be provided through Standard Bank, which will fund R435m of the deal, R194m of which will fund the staff trust, R97m for the University of Johannesburg’s School of Tourism and Hospitality and R144m for Vuwa. City Lodge would guarantee the funding.

Vuwa would fund R50m of its own stake. Vuwa is an empowerment company led by Bulelani Ngcuka, former head of the National Prosecuting Authority, who is an 18% shareholder.

Other Vuwa investments include stakes in Basil Read Holdings, Top Fix Holdings and platinum miner Wesizwe.

Vuwa shareholders include Kennedy Memani, Gilimamba Mahlati, Albert Nemukula, Old Mutual Life Assurance Company SA, Dumisani Tabata, African Footprint Investment Holdings, Lungisa Dyosi and Sipho Ngwema.

Source: Business Day