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Tawanda Musarurwa Senior Business Reporter
Clothing retailer Edgars Stores Limited’s shareholders have approved the company’s proposed $70 million capital raise.
The agenda was approved during an extraordinary general meeting (EGM) on June 16.
The firm, which recently underwent a restructuring last year, is looking to raise funds to implement expansion projects, through a renounceable rights offer of 274 745 630 ordinary shares.
The acquisition of Edgars Stores Limited by Mauritian investment management firm SSCG Africa Holdings last year was part of a restructuring of the former’s South African parent company Edcon Holdings.
Edcon is currently facing bankruptcy.
A rights offer allows existing shareholders to buy more shares in the company at a discount in proportion to their existing shareholding.
But rights issues have been uncommon on the Zimbabwe Stock Exchange (ZSE) over the past few year.
Edgars Stores, which has four main subsidiaries — Edgars, Jet, Edgars Financial Services and its clothing manufacturing unit, Carousel, will become one of the few listed companies to hold a rights issue in recent times.
“The directors . . . are hereby authorised to raise $70 000 000 by way of a renounceable rights offer to all shareholders, pro rata to their existing shareholding, being the offer of 274 745 630 new ordinary shares of a nominal value of 0.01 each, at a rights offer subscription price of $0.2548 per share, on the basis of five new ordinary shares for every six ordinary shares held,” said company secretary Vuyo Nxumalo said in an update.
As at close of trading on Wednesday, Edgars shares were trading at 100 cents on the ZSE.
The EGM also saw shareholders approve the redenomination of the company’s share capital to Zimbabwe dollars from United States dollars following the change of currency in the country last year.
The authorised share capital of the company has been re-denominated from US$4 million, comprising 400 000 000 ordinary shares of a nominal value of US$0,01 each, to $4 million, comprising 400 000 000 ordinary shares of a nominal value of $0.01 each.
Edgars’ authorised share capital was also increased from $4 million, comprising of 400 000 000 ordinary shares of a nominal value $0.01 each, to $7 million, comprising of 700 000 000 ordinary shares of a nominal value $0.01.
Meanwhile, the new capital will go towards the group’s expansion programme. Edgars Stores recently opened new stores in Banket, Chegutu and Kadoma, as it seeks to boost profitability going forward. For the 52-weeks period to January, 2020 Edgars’ turnover decreased by 5 percent from $629 million in the previous year to $595 million in the current year, despite a 23 percent decrease in units sold due to subdued consumer spending.
The group’s profit after tax for the period stood at $17,9 million, an 81 percent decrease from $91, 8 million in the same period last year.
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