Blantyre Hotels Limited (BHL) plc shareholders have been encouraged to subscribe to their offer of rights shares to avoid having their equity interest in the Malawi Stock Exchange (MSE)-listed firm dropping by 86 percent.
BHL decided to issue rights shares, shares offered to existing shareholders at a discounted price, to raise K62.4 billion to complete its four-star 180-bed golf estate hotel situated at Lilongwe Golf Club.
The firm’s company secretary Leonard Chisale said in an abridged circular to shareholders that the entitled shareholders will be offered renounceable rights to subscribe for six rights shares for every one ordinary share held.
He said: “Entitled shareholders who do not take up any of their rights to subscribe for the rights shares will suffer an immediate dilution of up to a maximum of 86 percent of their interest in the company.”
Chisale said directors expect the rights issue will make a positive contribution in the year-ending December 31 2024, adding that adjusting the receipts of the net proceeds would raise the company’s net assets to K69.3 billion by December 31 2024.
In an interview, equity investment analyst Kondwani Makwakwa said the issuance of rights shares for BHL will bring liquidity on the market and opportunity for more individuals to own its shares as there were no available stocks for sale.
“The new share issue will increase the availability of the stock on the market. In the past, many people wanted to buy the stock, but there wasn’t enough supply. This move will benefit both the public and the market by making the shares more accessible.
“Additionally, with more shares in circulation, it can lead to increased liquidity, making it easier for investors to buy and sell the stock more quickly,” he said.
Makwakwa said the Lilongwe hotel project should bring confidence to shareholders as having just one hotel for a long time made it hard for BHL to compete with other chains that are in many places across the country.
In a separate interview on Thursday, minority shareholders association of listed companies secretary general Frank Harawa said most investors are waiting for the prospectus to appreciate what the company will offer.
“We are excited, of course, but it will depend on the outlook of the prospectus for us to make a decision,” he said.
The comprehensive plan shows that the company could raise the required K62.4 billion by 28 December as it intends to have the offer period closed on 22 November, before listing on the MSE.
BHL plc, owners of Protea Hotel by Marriot Blantyre Ryalls, is expected to increase its shareholding in the Lilongwe hotel project by almost 70 percent upon completion of the rights issue process sale.
The hotel project is a joint venture of BHL and Oasis Hospitality Limited and is expected to be completed by December 2025 with its opening anticipated in January 2026.
