Truworths raise $2,227 billion through rights offer

Business Reporter

Clothing retailer Truworths says it raised $2,227 billion through a rights offer to capitalize the company in order to sustain its viability.

In an update following the close of the offer on August 9, 2023, the company said the percentage subscription was 90.1 percent and the percentage taken by the underwriter was 9.9 percent.

According to the company, the number of rights offer shares was 384 067 512, while at the end of the offer, ordinary rights offer shares subscribed were 345 971 161.

The ordinary shares issued to the underwriter were 38,096,351. “The shares are to be issued and listed on the Zimbabwe Stock Exchange (ZSE) on Monday, August 21, 2023,” the company said.

In a circular in June this year, Truworths said the additional capital will increase working capital funding at a sustainable cost in light of the high-interest rate environment and reduce borrowings.

The funds will also finance the opening of new formats of Truworths chain stores and improve the product assortment.

According to the circular, the rights offer involved 384,067,512 ordinary shares of a nominal value of $0.0001 each, at a rights offer price of $5.80 per share, on the basis of one (1) new ordinary share for every one (1) ordinary share in issue as of the record date.

The rights offer shares represent 50 percent of the company’s enlarged issued ordinary share capital after the proposed rights offer.

The clothing retailer said recently that the Zimbabwean economy has been facing significant economic challenges, highlighted by a rapidly depreciating exchange rate resulting in high inflation accompanied by a decline in economic growth.

It said this was exacerbated by the COVID-19 pandemic, which saw Truworths retail outlets closed for periods in excess of 8 weeks in line with the government’s stipulated lockdowns, as the company considered this a non-essential service.

As a result, no government support was given, nor was there any concession on costs during the period.

“This period also witnessed the country going into hyperinflation from July 2019 on.” At the onset of hyperinflationary conditions, the business reduced its exposure to credit sales because of the loss of value of its debtors’ books,” read part of the circular.