PG gets US$3m boost

bank for its timber business, PG Timbers.
A company official yesterday confirmed they had already started drawing on the funds. He would not identify the bank.

The facility has been used to restore all subsidiaries hit by under-merchandising, especially PG Timbers.
The management has indicated that within the merchandising business, focus would be on PG Timbers, now forecast to contribute US$8,4 million to the group in 2011 and US$13,3 million in 2014.

PG Timbers is the country’s premier manufacturer and distributor of hydro-nail trusses, softwoods, hardwoods, boards, doors, post-formed and value-added products, such as mouldings.
The facility comes after the group raised US$11,2 million used to restructure the company’s expensive debt and paying creditors.
PG’s timber business runs on cash and is the mainstay of the business, with 40 percent of total turnover.

The successful fund-raising initiative has enabled the group to access more working capital through restoration of credit facilities, ranging from 30 to 90 days.
A local securities firm has recommended PG a buy with a three-year target price of US9, 03c, giving a potential upside of 325 percent.

“PG has completed a successful capital raise and with a revised strategic direction driven by cost-cutting and a focus on core business, we anticipate to see the business return to profitability by full year 2011,” said the company.

PG Timbers has a strong shareholder base of investment companies, financial institutions, asset management and insurance companies.
Second Nominees linked to BancABC, controlling 19,9 percent, Old Mutual Life Company 19,13 percent and Barclays Bank of Zimbabwe controlling 17,67 percent, are the three major shareholders in the group.
BancABC had indicated plans to exit the group after posting a US$7,5 million loss to December 2010. But the financial house has decided to keep the strategic investment.

During 2010, PG discontinued non-performing businesses and branches including the PG Safety Glass whose operations in Mutare ceased.
J&F branch in Harare was also closed down with indications the group will continue to close down all non-performing branches.

The group is also scouting for potential buyers for the discontinued PG Safety Glass manufacturing operations in Mutare.
Suitable investors into Manica Board and Doors are being engaged to take up the shareholding, which will result in significant dilution of PG’s interest.

It is understood that PG will in the short term be allocated a reduced share of losses thanks to their reduced shareholding in MBD.
PG owns 60 percent of MBD through the wholly-owned subsidiary Zimboard Products and 40 percent by PG Bison of Mauritius, the leading particle board producer in Africa and part of the Steinhoff group.

Historically, this company exports over 70 percent of its products. PG Bison offers technical and manufacturing support to the business, while PG offers the distribution network on the domestic market.