Online Reporter
Business Reporter
OK Zimbabwe Limited has issued a further cautionary statement, indicating that discussions regarding a proposed US$30 million capital raise are now at an advanced stage and nearing finalisation.
This significant equity raise aims to restore working capital, honour supplier commitments, and fund strategic refurbishments and digital upgrades across the retailer’s network. In a cautionary notice, the board has advised shareholders and the investing public to exercise caution when trading the company’s shares.
“Discussions regarding the proposed US$30 million capital raise are now at an advanced stage and nearing finalisation,” said company secretary Mrs Margaret Munyuru. She added that a circular incorporating notice of an extraordinary general meeting (EGM) will be published once final terms are agreed.
The capital call follows a January 2025 position statement in which OK Zimbabwe, the nation’s largest retail chain by outlet count, revealed the closure of five branches in Harare and Bulawayo. The closures affected outlets at Robson Manyika, Glen Norah, Kuwadzana Express and Mbare in Harare, as well as Chitungwiza Town Centre.
Hundreds of employees were to be retrenched under a severance package that offers one month’s salary per year of service, three months’ notice pay and settlement of accrued leave, although uptake of the terms has not been disclosed.
Management attributed the shutdowns to a challenging trading environment, but analysts pointed to deeper structural issues. By late 2024, OK Zimbabwe was facing acute liquidity constraints that forced key suppliers to suspend deliveries over unpaid invoices totalling roughly
US$17 million and ZiG 537 million in local-currency obligations.
The resulting stock-outs have dented customer footfall and eroded sales, exacerbating an already precarious financial position.
Market watchers have also scrutinised the retailer’s dividend record, suggesting that generous shareholder payouts may have undermined working capital buffers. In March 2022, OK Zimbabwe declared a US dollar dividend of 0,13 cents per share, about US$1,7 million in total, and followed with a 0,15 cent distribution in March 2023.
Five months after the second payout, the company resorted to a US$5 million loan at a 7,5 percent annual interest rate, raising questions about the timing of external borrowing amid tight liquidity.
“Dividend payouts, while attractive to investors, appear to have constrained OK’s ability to maintain adequate stock levels,” observed a banking sector analyst. “The mid-2023 loan was a stop-gap; this new capital raise must tackle the root causes of the shortfall.”
Mrs Munyuru confirmed that the primary use of proceeds will be to bolster working capital and clear supplier debts. A portion of the funds will be allocated to refurbishing high-traffic stores and upgrading digital supply-chain platforms intended to improve inventory management and reduce the risk of stock-outs.
To execute the raise, the board has engaged a consortium of local and international investors. Once finalised, shareholders will receive a circular detailing the terms of the equity issuance and any proposed amendments to the company’s Memorandum and Articles of Association.
Approval at the forthcoming EGM will be required before the transaction can proceed.
Analysts say the success of the capital raise will be pivotal.
Namatai Maeresera, an economic analyst, said, “Restored supplier confidence could enable OK Zimbabwe to replenish its shelves and recapture lost sales, while planned refurbishments and digital enhancements may strengthen its competitive position in a market beset by rising costs and narrow margins.”
Until the raise is completed, Mrs Munyuru reminded stakeholders that the company will make further announcements “in accordance with regulatory requirements as material developments occur.”
