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ATL assesses progress since suspension from BSE KABO MOKGOABONEStaff Writer 9/14/2004 9:59:30 PM (GMT +2)The troubled tourism outfit - Afritourism Limited (ATL), held its much-awaited annual general meeting (AGM) on Monday, without the expected fireworks from its shareholders. This was the first meeting - which included shareholders - since the company was suspended from trading from the Botswana Stock Exchange (BSE) venture capital board.

However, the newly appointed chairman of the ATL group Sanjeev Gupta - who is also the CEO of Botswana Insurance Fund Management (Bifm) - the majority shareholders - painted a positive outlook for the company since a new strategy was put in place to turn it back to profitability.

Bifm is said to have already injected about P5 million to save the company.
Gupta replaced Glynn O’Leary, who was fired as chairman after the company was suspended from trading on the BSE in July, while Myra Sekgororoane replaced Peter Wright as chief executive officer.

Gupta told the AGM that the performance of ATL is being closely monitored in order to bring changes that would take it from red to black.
“The management is bringing about the required changes and the main shareholders and bankers currently remain behind ATL and support the changes being brought in. The business model is being closely scrutinised,” Gupta said, adding that the management is coping with the demand that the board has made in terms of restructuring and cost cutting measures.
“We intend to spread our operations. Even though the last six months were not tourism friendly, we expect that changes will bear fruit in the second half of the year,” Gupta said.
He described the current period at ATL as a ‘distress” period of which if the new changes brought are not fruitful, there may be a need for other initiatives to be put in place.

However, at the AGM, the sole voice of discontent was from Johnny Ray - one of the attendants - who kept the AGM alive by questioning its management style, which has failed to meet its profit target and instead has made losses.
“The business model is good, but the problem is with the management team. I am extremely disappointed with the management team and suggest that the whole marketing strategy should be looked at,” Ray said.

Ray objected to the re-appointment of O’Leary as a non-executive director and the approval of the remuneration of the staff. “The remunerations are not justified,” Ray said.
He said he objected to the re-appointment because he said under O’Leary’s leadership, the company posted poor results. However, the majority who were in attendance felt that O’Leary remains important as he has vast experience in the tourism industry and they overruled Ray’s objections.

Ray, who is said to be the one who came up with the concept of Afritourism, was reminded that he should also take the blame as he watched the performance of the group deteriorate, but he defended himself by saying he had other businesses to take care of.

The majority shareholder in ATL group is KYS, which is a subsidiary of Bifm, which holds a 60 percent stake in KYS. Other shareholders include 10 individual vendors, who sold their 19 related tourism operations to ATL and subsequently became shareholders.
There are also some fears that the group will be subject to an investigation by the BSE, whereby key people involved in the dismal performance of the group would be called in to testify.
Afritourism listed on the BSE in March 2003 but has seen its share value tumble by more than 70 percent. It failed to meet the profit target of P 3.7 million it set in January, and instead made a loss of P 6.7 million.

Although the company blames its poor performance on the war on terrorism, the depreciation of the Pula against the US Dollar and political problems in Zimbabwe, shareholders like Ray blame the poor performance on poor management.

The other tourism outfit, which is listed on the BSE, is Chobe Holdings, which is suffering a similar fate of events in the Middle East.

Glynn O'leary gets fired as Afritourism CEO - mismanagement

. Bifm lost over its investment in Afritourism. The tourism outfit went on to be investigated by the Botswana Stock Exchange. Bifm has a shareholding through its subsidiary-KYS, which holds 60 percent of the tourism group. During the early days of its collapse, Bifm injected about P5 million to save the company.

AFRITOURISM BOARD MOVES FOR LIQUIDATION

www.bifm.co.bw/news.php?newsid=1


Thursday 11th November, 2004 General
Following protracted effort to change the poor performance of Afritourism Limited (ATL), its board was forced to make the painful decision to consider the only remaining option: liquidation.
According to Mothusi Lekalake, Head: Corporate Communications at Bifm, the decision was taken by ATL board of directors after all efforts to turn ATL around proved fruitless.
Earlier this year, as the financial morass into which ATL had descended became increasingly apparent, Bifm – as the company’s major shareholder – stepped in to try and rescue the company.
Bifm CEO Sanjeev Gupta was appointed Chairman of ATL, replacing former executive chairman Glenn O’Leary. The other appointment was that of Victor Senye – BIFM’s Head of Business Strategy & Development. Several management changes were also instituted.
An operational review of the company was undertaken through the appointment of KPMG hotel and tourism division.
Senye explains that Bifm had invested in ATL because it appeared to offer a unique commercial approach to promoting and benefiting from Botswana tourism.
Following the listing, the financial performance of the company showed a picture drastically different to the one contemplated in the prospectus at the time of listing. The inability to generate timely and reliable financial and operational information was a matter of concern to the board, especially against the background of a supposedly robust reservations and accounting system as was reported in the prospectus at the time of listing. This prompted an indepth review of the business as to whether the main issues were the business environment or whether the business fundamentals were inappropriate, notwithstanding the fact that it had been a subject of review by various professionals and advisors.
“The ATL suspension from trading on the Botswana Stock Exchange was of no surprise when considering the dramatic decline in share price within a relatively short period of time from listing,” he says.
Matters appeared to improve when ATL secured a contract from DaimlerCrysler to launch its Jeep Cherokee at ATL’s flagship lodge, Elephant Valley – and Bifm agreed to provide the P5-million lifeboat required to fulfil this contract and meet some of the working capital requirements.
But this cash injection barely made a dent on ATL’s rapidly sinking bottom line. “There was just too much accumulated historical debt to service; too many non-commercially viable historical contracts that had been entered into; and enormous costs associated with downsizing and restructuring the entire operation,” Senye continues.
Efforts to seek an equity partner did not bear fruit due to the fact that no one was prepared to finance historical losses and to invest in an entity where there is uncertainty regarding its future.
The only way ATL can be saved is if it trades its way out of trouble – and that certainly won’t happen during the coming off-peak tourist season.
“As a result, the board was not convinced that there are any prospects in the foreseeable future for the company to meet its obligations as they arise – from a corporate governance perspective – but to apply for ATL to be placed into liquidation.”
Senye emphasises, however, that Bifm still considers the tourism industry to represent a viable investment opportunity in line with the Botswana 2016 Vision, provided key investment parameters are in place.
“Bifm will therefore continue to look for viable investment opportunities in the tourism industry,” he concludes.