Transcorp Hotels Plc plans to raise ₦10 billion from the domestic market to fortify its balance sheet in light of the COVID-19 crisis that has crippled the hospitality industry, the company said this week, after securing necessary approval at the recent extraordinary general meeting held Monday.

Shareholders gave their nods to the proposal from the board of directors, authorizing the issuance of 2,659,574,468 ordinary shares of 50 kobo each by way of a rights issue. This is based on seven new ordinary shares for every 20 ordinary shares of 50 kobo each held at a price of ₦3.76 per share, Transcorp said Tuesday.

The shares will be issued from the authorized share capital of the company which is currently at ₦7.5 billion comprising of 15 billion ordinary shares of ₦0.50 each and the resultant issued and fully paid-up share capital will be ₦5.129 billion consisting of 10.259 billion ordinary shares of ₦0.50 each, it said.

“Given the challenging times the hospitality industry faces, it has become critical to inject funding into the business for a stronger balance sheet,” said Alexander M. Adeyemi, a non-executive director of the company, who also represents the Ministry of Finance on the board.

Government efforts to contain the spread of the coronavirus disease led to lockdowns and travel restrictions across countries globally, affecting several businesses and economies at large. The ensuing slump in demand for travel (and lodging) makes the hospitality industry one of the hardest-hit sectors, along with aviation and tourism, with a spate of losses already being reported by players in the space.

Experts warn 2020 could go down as the worst in modern history for hotels and travel businesses around the world, an industry that a few months ago accounted for 10.4 percent of global gross domestic product and 10 percent of global employment. The World Travel and Tourism Council expects a global loss of 75 million jobs and $2.1 trillion in revenue should the pandemic continue.

Stakeholders have called on the government to help affected businesses. Nigeria’s central bank announced some measures to alleviate the impact of the crisis on the nation’s economy including a ₦1.1 trillion intervention fund to support sectors affected by the pandemic. But it remains unclear if the hospitality space is being considered for the bailout.

Mckinsey research suggests that recovery to pre-COVID-19 levels could take until 2023 or later even with a series of proactive steps players in the industry – big and small – have been taking such as the rights issue by Transcorp.

Despite the current harsh operating environment and bleak outlook, the approval and endorsement of shareholders to raise additional capital empower the Transcorp board and management to look to the future with confidence, Chairman Emmanuel N. Nnorom said.

Transcorp Hotels, the hospitality subsidiary of Transnational Corporation of Nigeria Plc and owners of the iconic Transcorp Hilton Abuja and Transcorp Hotels Calabar, has “maintained a history of excellent performance in the hospitality industry, and this is a bold step towards the achievement of its long term goals,” Adeyemi added.

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