South Africa's City Lodge Hotels Ltd said on Monday the hotel chain aimed to raise up to 1.2 billion rand ($69.3 million) via a rights issue to stave off a cash crunch.

The money raised will help pay debt, meet other obligations and generate working capital to plug a cash flow shortfall.

South Africa went into a two-month lockdown in March to curb the spread of coronavirus, shutting beaches and game reserves, the country's main tourist attractions, and dealing a blow to the hotel industry.

The rights issue would "create debt capacity and a flexible capital structure to position the company for future growth," City Lodge said.

Out of its 55 hotels in South Africa, City Lodge has two serving as quarantine centres and 19 hotels for stranded guests, essential services and business travel running at limited occupancies, it said.

($1 = 17.3202 rand)

(Reporting by Tumelo Modiba; Editing by Promit Mukherjee and Edmund Blair)