Home » Business » Willdale Seeks Rights Issue Approval

Listed brick maker, Willdale Limited, will approach shareholders for permission to issue shares to raise $3,5 million for acquisition of new equipment.

If granted permission, the directors will issue semi-annual redeemable convertible cumulative preference shares of nominal value $0,0001 at a subscription price of $1 each.

An extraordinary general meeting has been scheduled for May 6 this year and the rights issue is subject to approval by the Zimbabwe Stock Exchange and other conditions precedent.

The new shares would be issued at the ratio of one 10 percent semi-annual redeemable convertible cumulative preference shares for every 546,24 ordinary shares already held.

Ordinary shares arising from the conversion of preference shares as per terms of the rights issue will rank equal with existing ordinary shares if Willdale cannot redeem the shares.

Willdale said the new equipment would eliminate excessive down time caused by the old equipment, which has compromised the viability of the company.

“The low production volumes have resulted in high average cost of production for Willdale leading to reduced viability of the company’s brick making operations.”

Willdale directors believe fresh capital will improve production, restructure the balance sheet bring economies of scale.

However, they pointed out that failure to implement the transaction would result in Willdale continuing to operate at sub optimal levels, continued equipment down time, inability to meet demand and failure to service the firm’s debts.

The company has engaged Old Mutual Life Assurance Company Zimbabwe as underwriters to the proposed rights offer. Major shareholders constituting 52,67 percent of shares have given irrevocable undertaking to support the cash call.

Its financial position has been negatively affected by a $6,65 million debt overhang with about 86,6 percent of the debt being short term (under one year) and 13,5 percent medium (over one year).

The directors said the maturity profile of the debt has impacted negatively affected the company’s liquidity with the average cost of the debt standing at 10,7 percent per year.

To give effect to the transaction, Willdale will increase the firm’s authorised ordinary share capital from two billion to three billion ordinary shares valued at nominal value of $0,00005 each.

Source : The Herald