Matebello Motloung

Colin Human, executive chairman of Queensgate Hotels & Leisure, may say there is nothing untoward about the sudden resignation of CE Andrew Hubbard and another executive, but it’s likely some shareholders don’t feel the same way.

Hubbard and Holger Friedrichsen, owners of Queensgate Holdings, which is a major shareholder in the listed entity, resigned from the troubled hotel development and management group and its subsidiaries with immediate effect last Wednesday.

Human insists the resignations were not a case of directors jumping off a sinking ship.

He says they resigned to allow the restructuring process to take place.

The past 12 months have been Queensgate’s worst in a long time.

The group is taking blow after blow. It has been knocked by the slump in tourism and income from its traditional funding source — German investors — has dried up because of the global financial crisis.

Human says Queensgate tried, unsuccessfully, to find local funders, but the recession had caused them, banks included, to be ultra conservative in giving out loans.

“It’s all about cash flow and funding,” says Human.

“We were caught short on the swings and roundabouts, and these resulted in cash-flow strains.”

The market should know in the next two weeks how Queensgate expects to make it out of this mess. The group’s steering committee is working on a restructuring proposal.

“This is really an attempt to stabilise the group and reposition it so that it can continue with its operations.”

Human says possible solutions to Queensgate’s woes may entail some unbundling and the disposal of some of the group’s assets.

In the past year, Queensgate’s share price has fallen from 5c to 2c, and its market capitalisation has dropped from R417,8m to just R36m.

Source: Financial Mail