eBusiness Weekly
Business Writer
The Government is intervening in the dispute between African Sun and Makasa Sun over the lease agreement of the Kingdom Hotel in Victoria Falls, Business Weekly reports.
In July this year, ASL announced it was exiting Kingdom Hotel, on notice, after failing to agree on the lease term.
This was despite the hospitality group winning the tender to lease the 294-roomed four-star hotel in the resort town of Vic Falls on a long term.
Makasa is jointly owned by Barclays Pension Fund while the other 50 percent is owned by First Capital Bank, the sponsoring employer.
Barclays plc sold its local unit to Malawi-listed First Merchant Bank in 2017 when the British lender exited from Africa.
This dispute arose after FCB insisted on a two-year lease term as a way of rebuilding the trust “in our business relationship” while ASL wanted 10 years “sufficient to return its investment.”
Several sources close to the developments told Business Weekly that “very critical” negotiations have been initiated “in an attempt to amicably resolve this matter.”
“The Government feels that the property, being partly owned by a local pension fund should not be exclusively allowed to go into the hands of foreigners,” said one source who requested to remain anonymous citing confidentiality.
“It is a cautious approach (being taken) given that there is also an element of a foreign investor.”
ASL chairman, Dr Emmanuel Fundira ,confirmed the negotiations but declined to shed more light saying “we do not want to jeopardise negotiations that might be taking place.” No comment could be immediately obtained from Makasa Sun Ltd.
At the company AGM held in July, Dr Fundiara said that there had not been consensus on the tenure of the lease with Makasa, which was offering a tenure of two years against the “tenure in our bid of at least 10 years, which we deemed sufficient to return our envisaged investment into the hotel.” Some of the tender requirements included bringing in an international hotel brand and making substantial investments in rebranding. ASL had partnered with InterContinental Hotels Group (IHG) as its international brand partner and the hotel group would have invested US$6,5 million towards rebranding over 10 years.
ASL managed the Kingdom brand since 1997 after rebuilding the hotel using a US$24 million loan from Barclays. ASL failed to repay the debt after the tourism business tumbled due to violence linked to the land reform programme at the turn of the millennium.
Then, a string of travel warnings was issued by the western governments against visiting Zimbabwe.
There was a scheme of arrangement under which the loan was converted to equity with ASL, then known as Zimbabwe Sun Hotels, retaining the pre-emptive right to lease the property.
