Tsogo Sun banks on R900m African expansion
Tsogo Sun will spend US$30 million (R270 million) to expand its hotel in Mozambique, the Southern Sun Maputo. This will involve a complete refurbishment of the existing 158 room hotel, including the bedrooms and public areas as well as an expansion of the restaurant, the addition of 110 new hotel rooms as well as new conferencing facilities. The expansion takes advantage of the unique location of the hotel, extending along the beachfront on the Avenida de Marginal.
Says Marcel von Aulock, CEO of Tsogo Sun: “The Mozambican economy has shown encouraging signs of growth in recent years, and Tsogo Sun has benefitted from a strong trading performance at the Southern Sun Maputo. The Group has for some time been planning to utilise the additional land owned next to the hotel and believe that this exciting expansion programme will cement the Southern Sun Maputo as the destination hotel of choice in the city.”
The project in Nigeria involves the acquisition of an approximate 75% stake in Ikoyi Hotels Limited, the holding company of the Southern Sun Ikoyi hotel in Lagos Nigeria. This hotel has been managed by the Group for the original developers since opening in 2009. The Group’s expected investment, including loan funding, is approximately US$70 million (R630 million). The acquisition is subject to several conditions precedent including regulatory approvals. Shareholders will be notified once these have been fulfilled and the Acquisition becomes effective. The Acquisition is not a categorised transaction in terms of the Listings Requirements of the JSE Limited.
The Southern Sun Ikoyi hotel is centrally located with convenient access to prime business nodes in Lagos and comprises 195 guest rooms and suites, a restaurant, business centre as well as meeting room facilities. The hotel also has additional land available for future expansion.
Says Von Aulock: “This acquisition will cement our presence within the fast growing and progressive Nigerian economy as well as provide a base from which to expand our operations in Nigeria.”
The investments totalling US$100 million will be funded through a combination of existing offshore cash and new US$–based borrowing facilities.