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Harare Bureau
PG INDUSTRIES shareholders last Friday approved yet another capital raise coupled with a corporate restructure which is expected to turna round the fortunes of the firms which has over the years seen a deterioration in its book value.Shareholders approved the Members’ Scheme meeting during an extra-ordinary general meeting. Acting PG chairman Bryan Thom announced that shareholders had voted overwhelmingly through a 100 percent vote for each of the proposed ordinary and special resolutions that had been tabled.
Some of the resolutions include the conversion of PG debentures issued in 2010 from redeemable to convertible, and the taking up of shares by the holders of the debentures, the placement of one billion ordinary shares to Old Mutual Life Assurance Company at an offer price of $0,001 and the disposal of properties. This will see the group raise $3.5 million.
The sale of properties will raise $960,000 and the group said it had already secured buyers.
The group will also rain $1 million from the private placement while it will get debt funding from BancABC with a tenure of 36 months from draw-down date, 12 percent all in all interest rate per annum and secured by immovable properties and an additional $440,000 is expected from bank loans and guarantees.
The company in January had schemes of arrangement with various classes of its creditors while a corporate reorganisation also commenced in the same month.
In 2010, the company successfully raised $11.2 million from shareholders through a combination of debentures ($6.72 million) and equity ($4.48 million).
The bulk of the funds were used to settle legacy creditors and amounts owed to various financial institutions that were threatening the going concern status of the company.
A limited portion of the proceeds from the capital raise were invested in working capital. The view at that time was that supplier credit relations would normalise thus providing working capital support to PG. Given the experience that suppliers had gone through before the capital raise, most had lost confidence in PGIZ and were slow to resume providing stock on credit terms to the company. This situation resulted in the company continuing to experience working capital constraints.
After the $3.5 million transaction and corporate restructure, PG will be positioned as a lean and adaptive market player with a cleaner balance sheet and sound working capital position.
This augurs well for the company’s recovery and growth prospects in a market which is expected to continue to be driven by the individual home builder for the foreseeable future.
derick.khumalo