Peermont buys Botswana hotels

Peermont was chosen as purchaser from a variety of national, regional and international private investors and hotel companies.

Peermont Global Bostwana is a 60-40 joint venture between recently listed South African hotel group Peermont Global and the Botswana Development Corporation.

The purchase, for a total consideration is 47.5m pula (R63.6m), is being done via Golding Hotel Investment Consultants (GHIC), a member of the Pam Golding Property group.

The price includes the acquisition of the franchises of the News Café and Spur at the hotels.

Joop Demes, managing director of GHIC, said that this was the largest single transaction concluded in the hospitality and leisure industry in Botswana to date.

The estimated replacement value of the two hotels would be in excess of R70m, he said.

Peermont Global CEO Ernie Joubert said Peermont Global (Botswana) had financed the acquisition through the issue of unsecured corporate notes amounting to a face value of 25m pula, as well as a bank loan secured by a mortgage bond over the two Syringa properties, of 25m pula.

The corporate notes were issued at a fixed rate of 12.25% and are redeemable in five years.

The variable-rate bank loan carries interest at 2% below the Botswana prime rate, currently at 15.75%, and is repayable over a 10-year period.

The two Syringa properties are estimated to have generated a combined Ebitda of 9.6m pula from revenues of 18.5m pula for the 12 months ended February 28 2005.

The transaction became effective on March 4 2005.

A group such as Peermont has the ability to invest virtually anywhere in the world, and the fact that this investment was made within southern Africa is indicative of the confidence the group has in the region, said Demes.

"It is also encouraging to note that Peermont, as a South African hotel company, was able to clinch this deal amid strong international competition."

The acquisition, coupled with Peermont's existing two hotels in Gaborone, establishes the group as the leading hotel player in Botswana and "will form the basis for further growth in the region", he added.

The seller, the Syringa Hotel and Lodge Group, is controlled by two shareholders from Botswana - the Hehir and the O'Connell families from Selebi Phikwe.

Peermont Global is expected to publish its final results for the year to end-December 2004 on Monday March 14.

Peermont Global has The Emperor and The Senator Hotels (Caesars Gauteng), The Grand Palm and Metcourt Hotels amongst others in its stabel.

It also sports convention centres Caesars Gauteng, Gauteng Graceland and the Grand Palm.