By Oliver Kazunga
Clothing manufacturer and retailer, Edgars Stores Limited is seeking to raise ZWL$2,7 million through rights offer to support the group’s expansion programmes, enhance working capital and balance sheet.
EdgarsIn a latest circular to shareholders, the Edgars board said the upcoming extraordinary general meeting on June 16, will consider and if deemed fit, approve a special resolution that authorises share capital increase to ZWL$7 million from ZWL$4 million.
The resolution will ensure there are sufficient shares to give to effect the proposed renounceable rights offer.
“The board is proposing a renounceable rights offer to recapitalise Edgars by way of a rights offer of 274 745 630 ordinary shares of a nominal value of ZWL$0,01 each at a rights offer price of ZWL$0,2548 per share, on the basis of five new ordinary shares for every six ordinary shares in issue as at the record date,” it said.
The above rights offer shares represent 45,66 percent of Edgars enlarged ordinary share capital post the proposed rights offer.
“The purpose of the rights offer is to further support Edgars expansion activities while also augmenting working capital hence strengthening the group’s balance sheet,” it said.
The board has deemed it fit to support an equity raise and inject additional capital into the business among others so as to intensify productivity of existing footprint, widen and deepen product portfolio offered by the group’s credit and financial services as well as to foster sufficient depth and breadth of inventories.
It is hoped the rights offer shares will be listed on the Zimbabwe Stock Exchange on July 27, 2020.
At the upcoming extraordinary general meeting, it is also envisaged that a special resolution redenominating the share capital of Edgars from United States dollars to local currency, will be approved.
Following the re-introduction of the Zimbabwe dollar as the sole legal tender in the country through Statutory Instrument 142/2019, every registered business is required to redenominate its share capital currently stated in US$ to ZWL$.
As at the full-year ended January 5, 2020, the group’s turnover decreased by five percent from ZWL$629 million in the previous year to ZWL$595 million in the current year and recorded a 23 percent decrease in units sold.
“Revenue performance for the last quarter, usually our peak turnover period, performed below expectation mainly due to subdued consumer spending in general and challenges with mobile payment platforms,” said Edgars.
Profit after tax for the period was ZWL$17,9 million, an 81 percent decrease from ZWL$91,8 million during the same period last year.
The business continues to prioritise cost containment. The group closed the year in an overstock provision but this was fresh stock and placed the group at an advantage for first quarter trading.
The group’s operations are Edgars Chain, Jet Chain, Carousel (factory) and the microfinance business. During the full-year ended January 5, 2020, the group’s foreign liabilities amounted to US$219,036. The Chronicle