OK Zimbabwe Limited, one of the country’s prominent retail groups listed on the Zimbabwe Stock Exchange, is embarking on a significant asset disposal plan, including the sale of four of its supermarket properties, as it grapples with severe financial distress.
The move, outlined in a cautionary statement and subsequent circular to shareholders, is aimed at raising crucial capital to stabilise the company and return it to a sustainable growth path.
The retail giant has been facing “acute financial distress,” struggling to generate sufficient operational cash flows to meet its maturing obligations.
This liquidity crisis has led to a substantial accumulation of overdue debts to creditors, compromised operational capacity, and an increased risk of judicial proceedings from unsettled creditors.
To address these challenges, the Directors are proposing a series of strategic initiatives, prominently featuring the disposal of immovable assets.
The properties slated for sale include the OK Mbuya Nehanda store, OK Gweru, OK Glen View, and OK Malvern. In addition to these four supermarkets, the company plans to sell a warehouse and two vacant commercial stands.
The company anticipates generating approximately US$10.5 million in net proceeds from these disposals, after accounting for transaction costs.
The strategy behind these proposed transactions is designed to address the company’s acute financial distress and lay the groundwork for future stability and growth.
According to the company secretary Margaret Munyuru, a primary objective is to inject much-needed capital to immediately restock stores, thereby facilitating the purchase of goods and restoring normal inventory levels.
A significant portion of the proceeds will also be allocated to settling overdue obligations, which amounted to US$30 million as of February 28, 2025.
The company believes that this move is critical and will restore trust with suppliers, a vital move to regain their support and unlock new credit lines, while also preempting costly judicial recovery processes that could lead to asset liquidation and a further erosion of shareholder value.
Beyond immediate financial relief, the transactions are intended to fundamentally “right size” the business for sustainable growth.
This involves a strategic optimisation of the company’s store footprint, with plans to either shut down underperforming operations or merge them with other business units for greater efficiency.
Munyuru said there is a strong focus on revitalising OK Zimbabwe’s value proposition to its customers.
This includes initiatives such as modernizing stores, introducing new rewards programmes, enhancing online shopping capabilities, and revitalising popular promotions like the OK Grand Challenge Jackpot Promotion.
The capital raised will also enable significant investment in appropriate technology, specifically upgrading ICT infrastructure.
The company believes that the technological enhancement will be critical for ensuring more efficient management of stores, stock, and creditor relationships, underpinning a more streamlined and competitive operational model for the future.
The company has warned shareholders about the dire implications of not approving these transactions.
“In the event that Shareholders do not approve the proposed Transactions, the Directors of the Company believe:
“Creditors may initiate judicial recovery proceedings, which can result in the disposal of assets at potentially lower values, negatively affecting the value of Shareholders’ investments in the Company.
“Given the highly competitive environment, a full recovery of the business will not be possible.
“OK Zimbabwe will continue to lose market share to new and traditional competitors as these continue to open new shops and accumulate retail space.
“The Company will also fall to claw back lost market share due to constrained capacity to offer wide product ranges, as well as convenient and modern facilities,” the directors noted.
Shareholders are set to consider and approve these resolutions at an upcoming Annual General Meeting, which will also involve a reconstitution of the Board of Directors aimed at aligning leadership with the company’s future strategic direction and onboarding new skills for transformation.
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