HOSPITALITY group, African Sun Limited completed its full acquisition of realtor, Dawn Properties Limited for $1,47 billion, during the half-year to June 30, 2022.
African Sun’s interest in DPL was revealed at a board meeting in May 2020, during which the board agreed to purchase the realtor by offering shareholders one share in the hotelier in exchange of 3,988075946 of the real estate firm’s shares.
As previously reported, the deal entailed African Sun issuing 616 129 718 new ordinary shares to be listed on the ZSE, for 2 457 172 108 shares in Dawn, representing 100% of the issued shares.
On the last day of trading, on February 17, 2021 Dawn shares were worth $982,86 million.
However, African Sun reported that by the end of 2021, a total of 561 745 443 African Sun shares were issued in exchange of a 91,17% equity ownership in Dawn, a $1,07 billion investments into the realtor.
“During the period under review the group acquired the remaining 8,83% shares of DPL through a tag along (3,21%) and drag along (5,62%) process in terms of section 239 of the Companies and Other Business Entities Act [Chapter 24:31],” ASL said, in a statement attached to the group’s half-year financial results ended June 30, 2020.
“The group settled the seller’s transaction costs during the process and in turn withheld shares sufficient to cover costs from shares that had been issued to former Dawn shareholders in line with the provision of the circular to Dawn shareholders. The shares withheld are now held by the company as treasury shares.”
African Sun said the treasury shares were measured at the value of the transaction costs settled by the group as this was taken as the consideration paid for the shares.
During the period, $54 384 275 worth of shares were issued to buy the remaining Dawn stake taking the total value to $1 474 359 582 as of June 30.
“The group adopted the par value method to record the treasury shares and the shares were deducted from equity with no gain or loss being recognised in profit or loss for the period,” African Sun said.
“The transaction resulted in a change of degree of ownership in Dawn Properties Limited from 91,17% to a 100% owned subsidiary.”
Currently, African Sun is working on fully integrating Dawn into the overall group activities a process that is supposed to be finished by the end of the year.
“The group’s strategy to rationalise its asset base by disposing of non-core real estate assets to unlock much needed liquidity for targeted capital expenditure on core operations, is progressing well,” African Sun chairperson Emmanuel Anesu Fundira said in the report under review.
“As of the date of this report, the group had raised US$1,7 million from the disposal of non-core assets, including proceeds from the former Brondesbury Park Hotel in Nyanga. The former Beitbridge Express Hotel property and 100% equity stake in Dawn Property Consultancy (Private) Limited, which are the principal non-core investments yet to disposed of, are being actively marketed.”
African Sun made a gain of $8,59 billion last year, after purchasing the initial 91,17% stake in DPL.
Following Dawn’s entry into the group, African Sun reported that 12% of its revenue of $4,32 billion was from the realtor in 2021.
Key contributors to Dawn revenues, African Sun reported in its 2021 annual report, included 22 (2020: 17) residential stand sales at Marlborough Sunset Views and property consultancy revenue. As at December 31, 2021, 23 stands remained unsold.