Oceans Hotel Ltd, owner of the R650m Radisson Blu Hotel in Umhlanga, says it has improved its communication with minority shareholders after complaints that the company had not properly shared information with smaller investors for a number of years.
The company with ties to prominent businessman Vivian Reddy told Business Times in Durban last week it had created a website — www.oceansumhlangahotel.co.za — and social media accounts where shareholders can regularly engage with it and enquire about the status of their investments and how their shares are performing.
Oceans and Reddy came under fire from about 20 public shareholders who said they had been left in the dark some seven years after they poured money into the ambitious project. The 200-room, five-star hotel in the development, is managed and operated by global luxury hospitality group Radisson Blu.
But Oceans Hotel was adamant it was in constant communication with the 23,000 individuals and entities that put money into the hotel development. “It’s not that there was no communication from the beginning,” said COO Brian Mpono.
“There was a prospectus which contained all the information regarding the hotel development and related shareholding details, an important document to read before investing. But as you know, most people don't read the fine print.”
He said the other problem was that some shareholders changed their contact details without alerting the company. “Communication is a two-way process. We have always been communicating with our shareholders, but what we discovered is that some had changed their emails, phone numbers and addresses and did not inform us. This resulted in communication from our side not reaching them. Some didn't even open their emails and we have proof of this,” said Mpono.
We’re also introducing other platforms such as WhatsApp business, with photographs and a diary of events happening at the hotel so as to effectively enhance communication with our valued shareholders
“There has always been a website with all the investor information. But because we value our shareholders and want them to reap returns from their investment, as this empowerment project was deliberately designed to benefit the working class, we have now enhanced the website, making it user friendly.
“We’re also introducing other platforms such as WhatsApp business, with photographs and a diary of events happening at the hotel so as to effectively enhance communication with our valued shareholders”
Mpono said the shareholders had invested only in the hotel and not in the entire R4.5bn Oceans development, which includes the attached Oceans Mall and residential apartments. He said the success of the hotel had attracted a further R1.3bn investment to create a new hotel and timeshare in the Oceans Umhlanga precinct.
In 2017, Oceans Hotel Ltd opened its public offering for shares in the new hotel to the public, for R20 a share. At the time, Reddy said potential investors would need to take up a minimum of 50 shares.
Reddy said because of disturbances caused by the July 2021 unrest in Durban, disruptions by the “construction mafia” and Covid, and with two construction companies collapsing, initial deadlines were not met and this affected the start of operations. “This then affected the period in which the hotel would be able to operate and start generating returns.”
Mpono added: “So, these are some of the issues our shareholders should understand. But now with our enhanced communication strategy, we hope everything will be sorted and there will be regular and improved interaction between the shareholders and us.”
He called on shareholders to be patient as their involvement was long term, and the operation was building momentum and recovering from the tourism slump induced by Covid.
Mpono said dividends would be paid only once debt acquired to construct the hotel had been repaid. “Our shareholders must understand that the hotel is prioritising debt repayment, as the loans were an essential part of the hotel’s construction and establishment phase.”
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