admina US$4 million rights offer.
The capital raising proposal will be brought before shareholders at the company’s annual general meeting scheduled for September 2.
Funds raised will be used to finance working capital needs for its three divisions – BMA Fasteners, Tube & Pipe and Hastt Zimbabwe.
Steelnet will ask shareholders permission to make a renounceable rights offer for 3 billion shares of a nominal value of US$0,0001 each.
The firm has proposed that the shares would be subscribed for at the rate of US$0,00117 per ordinary share and this would raise about US$3,5 million.
Steelnet said shareholders will get new shares in the ratio of 5,58 new shares for every share already held in the ZSE-listed firm.
The proposal will be considered as part of ordinary business on the day.
Under the special resolutions agenda shareholders will be asked to give directors permission to increase the authorised share capital of the company from 770 million to 4 billion to enable the issuance of new shares.
The group recently said it had a well proven product range supported by strong local and export demand, but was affected by capital constraints.
Last year the group announced that access to working capital would enable it to satisfy local and export demand for its range of products.
Steelnet first mooted plans to raise capital, including through disposal of old equipment and its seam welded pipes manufacturer Tube & Pipe.
However, these plans were shelved at the end of last year.
Group chairman Mr Chirandu Dhlembeu recently expressed fear over the group’s ability to continue as a going concern due to losses incurred last year and the possible impairment of property and equipment.
In the full year to December 31, 2010 Steelnet recorded a US$5,2 million loss due to capacity across all its divisions, which affected sales volumes.
All its operations require significant capital injection to meet local demand and explore the traditional export market.
The diversified steel products manufacturer used to have strong export presence in South Africa, Angola, Botswana, Mozambique and Zambia.
Steelnet’s BMA Fasteners manufactures a wide range of bolts, nuts, wire nails, roofing products, rock support systems and specialised forging used in mines.
It also provides auxilliary services such as hit dip galvanising, electroplating heat treatment, wire treatment, wire drawing and general engineering.
Hastt Zimbabwe provides a wide range of quality agricultural implements.
Online Reporter