HARARE- JSE listed Brainworks which has a vast portfolio of Zimbabwe assets largely concentrated in hospitality and property sectors, is in the market seeking to raise US$5.92 million ahead of maturing due debt obligations.

In a circular published on the JSE news service, the company said it seeks to raise R85.80 million by way of a renounceable rights offer. A rights offer is a method of capital raise through existing shareholders.

The shareholders are given the right to purchase shares ahead of the public and the price is typically at a discount to the prevailing market price. The rights offer shares totaling 13,199,997, will be offered to shareholders at a price of R6.5 which is a 19% to the closing price as at the previous trading session.

The company said the Rights Offer forms part of a broader capital restructuring of the company to extinguish materially all third-   party debt.

“The capital restructure will involve the conversion of certain loans with existing Shareholders into new Shares at a conversion price of R6.50 once the necessary approvals are sought” read the circular.

Brainworks had a total of $17 million in outstanding debt in both current and long term debt. The debt is split as $4.2 million non-current and $12.89 million in current obligations. The total amount is spread across a total of 4 Zimbabwe banks among other related parties.

Most of the accruing facilities offered are mortgaged against various hotel properties as well as land bank largely under Dawn Properties, its ZSE listed property investments company and were similarly solicited for purposes of aiding underlying operations in periods when the entities particularly Afsun, were under operational strain.

The facilities are listed below by bank

Dawn Properties Limited has an outstanding mortgage loan with CBZ Bank Limited which arose from a five year mortgage loan. The loan which bears interest at 9% (2017 - 16%)  per annum, is secured by a first mortgage bond over a certain piece of land located in Harare.  The mortgage loan is repayable up to  31 August 2021.

African Sun Zimbabwe (Private) Limited, a subsidiary of African Sun Limited, has three loan facilities with FBC Bank which all attract interest at 7.5% per annum (2017: 7.5%).  The loan is secured through unlimited guarantees by African Sun Limited and Brainworks Capital Management Limited and freehold property.

The aggregate outstanding balance on these facilities as at 31 December 2018 was US$4.2 million. The loans, with monthly and quartely repayments, mature between 31 July 2020 and 31 August 2022.

The Ecobank Zimbabwe loan which is held by Brainworks Capital Management , attracts interest at 8% (2017: 8%) per annum and is secured by 360 900 000 Dawn Property Limited shares and 146 299 461 African Sun Limited shares shares.

The NMB Bank Limited loan, which is held by Dawn Properties arose from a 5 year facility with NMB Bank Limited.

The outstanding loan bears interest at 9% (2017: 9%) per annum and is secured by first mortgage bonds over the Beitbridge Hotel, Great Zimbabwe Hotel, stand number 3204 New Marlborough Township, in addition to a guarantee by Brainworks Capital Management (Private) Limited. The loan matures on 31 October 2020.