Mega Market to capitalise Turnall, Truworths
One of Zimbabwe’s fast-growing business entities, Mega Market Limited, has put its weight behind the capitalisation and transformation of two Zimbabwe Stock Exchange-listed companies, Truworths and Turnall.
Mega Market, which is run by 37-year-old Shiraan Ahmed, has over the years, been known as a distributor of a wide range of fast-moving consumer goods in Zimbabwe.
It has a number of leading brands in different product categories and also has sole distribution rights for some very strong brands.
Its name has, however, appeared on the shareholder’s list of a number of ZSE-listed firms where it is a notable investor.
One such company is Turnall, where Mega Market and its associate company, Zimbabwean Brands, have a combined shareholding stake of 78,7 percent of the total issued shares of the company.
The other one is Truworths, where Mega Market has a shareholding of 28,66 percent of the total issued share capital.
But with the two companies requiring funding for working capital in the case of Truworths and in the case of Turnall for retooling and refurbish its fibre cement sheeting lines, and introducing Glass Reinforced Pipes (GRP) business, Mega Market has put its hand up to underwrite the capital raise initiatives.
Turnall is looking to raise $46,4 million while Truworths is looking to raise $2,2 billion, both through a rights offer.
Justifying the capital call, Turnall said following a series of challenging years where plant replacement and upgrading was not possible because of various economic and operational headwinds, these investments will allow the Group to “retool and refurbish its fibre cement sheeting lines” as well as “introduce Glass Reinforced Pipes (GRP) business”.
“The two investment projects will significantly improve the profitability and cashflows of the Group and increase the manufacturing capacity to meet the growing local and regional demand for its core products.
“The investments will also result in reduced operational costs through improved key efficiencies such as reduced distribution costs locally and regionally due to Zimbabwe’s central location in Southern Africa,” reads part of the company’s abridged circular to shareholders.
This will be done through a Renounceable Rights Offer of 4 930 403 080 Ordinary Shares of a nominal value of $0,01 each, at a Rights Offer price of $9,70 per share, on the basis of ten (10) new Ordinary Shares for each Ordinary Share in issue as at the Record Date.
On its part, Truworths said the Board has decided to raise additional capital into the business so as to “increase working capital funding at a sustainable cost in light of the high-interest rate environment, reduced borrowings, open new format Truworths Chain stores and improve the product assortment.”
This will be done by way of a Renounceable Rights Offer to all shareholders, pro rata to their existing shareholding, being the offer of 384 067 512 (Three hundred and eighty-four million, sixty-seven thousand, five hundred and twelve) new ordinary shares of a nominal value of $0,0001 each, at a Rights Offer subscription price of $5,80 ($580 cents) per share.
The listed entity said if the Renounceable Rights Offer is not implemented, the company will face severe cash flow constraints, high finance costs and reduced working capital.
Both companies are however looking to Mega Market to underwrite the capital raise in case other shareholders are not able to follow their rights.
Based on Truworths circular to shareholders, the Board has engaged Mega Market to underwrite the Renounceable Rights Offer.
If Mega Market is the only one that follows its rights as well as underwrites the capital raise, it will increase its stake to 64,33 percent from the current 28,66 percent.
Associate company Zimbabwean Brands is also expected to underwrite the Turnall rights offer and if its the only one that follows its rights, it shareholding will shoot to 96,82 percent from the current 64,98 percent.-ebusinessweekly
