Online Reporter
Martin Kadzere
Business Reporter
OK Zimbabwe plans to allocate just over 50 percent of funds raised from a rights issue and property disposals to settle current creditors, thereby reducing the cost of debt and re-establishing a normal trading cycle.
The company said its current debt of US$3,1 million for the year ended March 31, 2025, was unsustainable given the thin profit margins in the retail sector, according to an internal document seen by this publication.
As of February this year, OK’s overdue creditors totalled over US$30 million, with suppliers alone owed US$24 million.
Other payables, including utilities, services, marketing, cleaning and security amount to US$5,2 million, while statutory obligations stand at US$880 000.
The primary goals of the capital raise are to partially clear legacy creditor debt, strengthen the company’s working capital, fulfill capital expenditure needs and foster renewed supplier support.
A significant portion of the capital, US$20 million, will be sought via a renounceable rights offer.
Additionally, OK Zimbabwe anticipates generating US$10,5 million in net proceeds from the sale of select immovable assets.
For properties currently occupied by the company, sales will be finalised only if buyers agree to long-term lease-back arrangements with OK.
The company will prioritise properties that offer the highest saleability and value in the current market and a specific list of properties has been identified for this purpose
