Vusumuzi Dube
Nqobile Bhebhe, Senior Business Reporter
OK Zimbabwe’s board of directors has resolved to undertake a capital raise of up to US$30 million to address its funding gap and stabilise the retailer’s financial position.
The company faced severe stock shortages in the third quarter ending 31 December, 2024, reducing product availability to approximately 50 percent of normal stocking levels.
In a cautionary statement, Group Company Secretary, Mrs Margaret Munyuru, acknowledged the company’s financial struggles.
“Over the past financial year, OK Zimbabwe Limited has been experiencing significant operational and financial difficulties arising from both endogenous and exogenous factors, driven by a challenging operating environment,” she said
These difficulties have affected the retailer’s ability to meet financial obligations, particularly payments to suppliers and financial institutions.
The company has also struggled to maintain stock levels, as many suppliers have ceased deliveries due to unpaid balances.
“This has directly impacted product availability across the Company’s stores, affecting revenue generation and overall business performance, particularly in the last six months where trading levels were not adequate to cover costs,” Mrs Munyuru explained.
Macroeconomic volatility, including exchange rate-related pricing challenges, has exacerbated the situation, allowing informal retailers to operate with a competitive advantage.
Additionally, inflationary pressures have strained cost structures and pricing strategies, while liquidity constraints have weakened consumer spending and disrupted supply chains.
Given these challenges, OK Zimbabwe anticipates a significant loss for the financial year ending 31 March, 2025.
To address these financial constraints, the board has approved a capital raise of up to US$30 million.
“The capital raise will be a combination of a rights issue, private placement, and debt instruments,” Mrs Munyuru noted.
The initiative aims to strengthen the company’s balance sheet, improve liquidity, and enhance working capital availability, ensuring smooth operations and supporting a strategic turnaround plan.
Online Reporter