Caps Holding to delist

Stock Exchange.
After that, the producer-distributor of a variety of pharmaceutical products will merge its manufacturing division with Geddes Ltd, its distribution arm, said a source familiar with the restructuring exercise.
A new health care division will be established, resulting in the amalgamation of St Anne’s Hospital in Harare and QV Phar-macies.
The merged entities will later list separately by way of introduction. An extraordinary general meeting is expected to be held soon to approve the transaction.
Market analysts said the decision by Caps to delist would provide more “flexibility” to the restructuring than if it was undertaken when the firm was still listed.
“While Caps could have done it (restructure) when it was still listed, the process is more flexible off-market and could even be faster,” said one analyst.
Another analyst suggested that Caps was likely to bring in new investors. Executive chairman Mr Fred Mtanda could not comment on the matter.
There was no comment from the Zimba-bwe Stock Exchange either.
The developments come when Caps plans to buy Merck (Pty) Ltd, a South African pharmaceutical and industrial chemical company, which collapsed after it failed to raise funds.
Caps intended to borrow about R90 million to buy the SA company and then embark on a rights issue to repay the debt.
But this option ran into stone wall after it become apparent shareholders would fail to follow their rights. Caps then secured a foreign investor.
But this was likely to have serious implications on the shareholding structure as Caps market capitalisation, at about US$3,6 million, was way below the value of the SA company.
The investor would then end up with a majority stake in Caps Holdings. This would mean the group would not be compliant with the requirements of the Indigenisation and Economic Empowerment law.
Apart from drug manufacturing, Caps is also involved in retail through QV Pharmacies which has branches in Mozambique.
The company owns Geddes Limited, St Anne’s Hospital, Caps South Africa and QV Pharmacies Limited.
It said it would continue to invest in the existing operations to improve its competitiveness.
It has already embarked on a retooling exercise to enhance its operations.
The sterile section of the penicillin plant, non-operational last year, would resume production in the second quarter of this year, the group said.