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Covid-19 operational and liquidity update
City Lodge Hotels Limited
(Reg. No. 1986/002864/06)
(Incorporated in the Republic of South Africa)
Share Code: CLH ISIN Code: ZAE000117792
“City Lodge” or the “Company” or “the Group”
COVID-19 OPERATIONAL AND LIQUIDITY UPDATE
Cash resources and Funding
As reported in our announcement date 24 March 2020, the advent
of COVID-19 has had a severe impact on Group operations, cash
flows and cash resources. City Lodge is pleased to announce
that discussions with the Group’s funders have been ongoing and,
in addition to existing undrawn facilities, further facilities
of R200 million have been secured, ensuring sufficient liquidity
for current requirements. In addition, the borrowing covenants
for both the June 2020 and December 2020 measurement periods
have been waived. We continue to have positive engagement on all
options available to ensure the Group’s long-term
sustainability.
Operations
Following the implementation, effective midnight, 26 March 2020,
of a nationwide lockdown, the Group ceased operations at all of
its 55 South African hotels. Subsequently, in line with
announcements in the remaining territories in which the Group
operates, all 62 Group hotels were closed, resulting initially
in no revenue being earned. Limited operating activities have
however since taken place for varying periods and in compliance
with lockdown regulations and directions. Initially 7 of the
Group’s South African hotels remained operational, with 3
serving as quarantine hotels, 2 providing accommodation to
stranded international tourists and 3 providing accommodation to
essential services workers.
Representations were made and continue to be made by the Tourism
Business Council of South Africa and the Federated Hospitality
Association of South Africa on behalf of all key players in the
hospitality industry in response to the COVID-19 Risk Adjusted
Strategy (“RAA”), to permit hotels to operate prior to the
envisaged Level 1 RAA. Following the President’s announcement on
24 May 2020 that “certain high risk-economic activities will
remain prohibited”, including “Accommodation and domestic air
travel, except for business travel, which will be phased in on
dates to be announced”, the Minister of Tourism has clarified
that hotels may operate for purposes of accommodating stranded
tourists, business travellers and persons in quarantine or
isolation. As of today, 2 hotels are serving as quarantine hotels
and a further 21 (including 2 non-South African) hotels are open
for stranded guests, essential services and business travel
accommodation requirements, albeit at limited/low occupancies.
This position will be revisited on an ongoing basis and amended
where necessary, based on demand.
Internal planning to secure operational resilience, based on the
view that the impact of COVID-19 will be a feature for some time
to come, has advanced. The Group is comfortable that enhanced
hygiene and safety protocols (available on www.clhg.com), in
line with government and the World Health Organisation
recommendations, which includes sanitizing, social distancing
and acquisition of personal protective equipment (including face
masks, aprons, gloves), are in place. In addition, the Group has
implemented microbiology-based COVID-19 readiness audits.
Discussions with government and the private sector/essential and
critical business continuity services for the provision of
quarantine facilities and/or essential service staff
accommodation continue. The Group is ready to commence
operations, in line with the lockdown regulations, directions
and RAA, on short notice, as opportunities present themselves.
All booking channels, including the Group’s website,
www.clhg.com, remain open for all our hotels for reservations
for any period where our hotels are permitted to trade under the
RAA.
Costs
In addition to the cost containment measures previously reported
as having been implemented to optimise cash flows in order to
ensure continued liquidity during the lockdown period and
thereafter, the Company has implemented 50% salary reductions
for all employees who, due to the nature of their work, are not
able to work remotely, with effect from April 2020 for an
initial period of three months. To assist with limiting the
effect of the reduction in employee earnings, the Company is
assisting with applications for the revised UIF benefits. In
recognition of the challenging circumstances, the Board and
fourteen members of the executive and senior management team,
have agreed to forego 20% of their fees and salaries over the
commensurate three-month period.
Despite these measures, certain costs remain fixed and a drain
on cash flow.
The company continues to monitor the situation closely and
additional updates will be provided as the situation develops.
The information contained in this announcement has not been
reviewed or reported on by the Group’s external auditors.
Bryanston
12 June 2020
Sponsor
Nedbank Corporate & Investment Banking
Date: 12-06-2020 02:32:00
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