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.