CAPS to raise US$15m for recapitalisation

US$15 million to recapitalise operations and retire debt.
Shareholders of the company will meet on June 30 at an Extraordinary General Meeting to consider delisting the pharmaceutical firm as part of the group’s restructuring to bring in potential investors to inject fresh capital into the under-performing company.
In a statement to shareholders, the company said the funds could possibly be raised by way of new shares or other equity instruments through a possible rights issue or private placement.
Assuming the resolution is passed by shareholders, proceeds of the fund raising would also be used to tool the factory, refurbish hospital theatres and provide working capital.
The existing group structure will also be unbundled into three separate entities, CAPS Pharmaceutical Manufacturing, Distribution and Health Care.
Indications are that shareholders are likely to vote for the delisting of the company set for September 30, this year.
The group said the decision to delist will enable directors to be flexible and speed up decision-making.
CAPS is also expected to relist the restructured entity in the future. However, CAPS had indicated that the other reason for delisting was that the local bourse was trading on the negative due to the worldwide financial meltdown and the economic climate in the country.
“Currently, the group is underperforming and is facing some operational challenges, which can be addressed if there is an injection of capital.
“The board seeks to engage some potential investors and the proposed new status of the company will allow fast decision-making and greater flexibility,” said the company.
Very few companies quoted on the stock exchange have managed to recapitalise and for the majority that managed to come on the market, shareholders failed to follow their rights.
Due to lack of funding CAPS shares have continued to trade at a discount compared to the net asset value of the company.
Companies have failed to increase production as the liquidity constraints continue to hound the private sector.
Analysts say more companies are likely to delist as they continue to lose value due to lack of capitalisation after the introduction of the multiple-currency system in 2009.
However, according to the conditions of the delisting shareholders can dispose their interest in the company while the company is still trading on the bourse.
When a company is delisted it means that shareholders can no longer trade their share on the stock exchange since it will be a public company instead of public listed company.
CAPS said shareholders who are willing to shed off their stake before the delisting should do so.
Those who want to dispose after the delisting will be allowed to do so but the price per share will be determined by private valuation and agreement between individual buyer and seller, and the means of sale will be restricted to private deals.
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.