OK mulls US$30m reboot capital raise

OK Zimbabwe Limited has announced plans for a US$30 million capital raise to plug the group’s financial gap and breathe fresh life into operations, which had been blighted by several challenges, including limited ability to restock.

The giant retailer said in a cautionary statement released yesterday that given the negative impact of the turbulence the group has experienced in the recent past, it anticipated a significant loss for the year to March 31, 2025.

Amid the teething challenges, including mounting debts, which had resulted in most key suppliers refusing to do business, the country’s biggest retailers decided to shut down six branches by March 31, 2025, and lay off the affected staff.

The 83-year-old retailer said the capital raise will be attained through a combination of a rights issue, private placement, and debt instruments.

The primary objective of the initiative is to strengthen the group’s balance sheet and liquidity position to enable the company to enhance working capital availability and ensure smooth business operations.

This is expected to support the company’s ongoing strategic turnaround plan, aimed at revitalising its operations and improving its overall performance.

As the group buckled under the weight of unsustainable debt and working capital constraints, suppliers became increasingly unwilling to do business in local currency or credit terms, exacerbating the retailer’s situation.

The challenges emanated from a combination of internal and external factors, including an alleged tough trading environment characterised and liquidity constraints.

To turn around the situation, OK last month rehired former long-serving chief executive officer Mr Willard Zireva, who had stepped down eight years ago, leaving the group in a healthy financial state and profitable, and two other directors to steady the ship.

Following Mr Zireva’s return, OK Zimbabwe has indicated a rethink of its plans and will reverse the planned closure of some its branches, which was being pursued by the previous management, led by former CEO Mr Maxen Karombo and finance director Mr Philip Mushosho.

The new leadership has since shelved plans to close the Mbare branch in Harare and the Entumbane branch in Bulawayo.

The retail group is reportedly saddled by US$17 million and ZiG537 million in outstanding accounts to suppliers, some of whom allegedly pounced on part payments meant to unlock fresh supplies and refused to give new orders.

The capital raise initiative is expected to provide OK Zimbabwe with the necessary funding to bridge the financial gap, stabilise operations, and support its ongoing strategic turnaround plan.

“The board of directors has resolved to undertake a capital raise in the sum of up to US$30 million to bridge the funding gap and stabilise the company’s financial position. The capital raise will be a combination of a rights issue, private placement and debt instruments.

“The capital-raising initiative is expected to strengthen the company’s balance sheet and liquidity position.

It also aims to enhance working capital availability to ensure smooth business operations and support the company’s strategic turnaround plan,” said OK Zimbabwe group company secretary, Mrs Margaret Munyuru, in the cautionary statement.

In light of this, the group has advised shareholders and the investing public to exercise prudence when trading OK Zimbabwe’s shares due to the company’s current financial situation.

OK Zimbabwe has, however, assured stakeholders that it will maintain transparency throughout the capital raise process and beyond.

In line with regulatory requirements, the company will provide regular updates on any significant developments, ensuring that stakeholders remain informed about the progress of the capital raise and the company’s overall performance.

In a recent interview with Zimpapers Business Hub, Mr Zireva expressed optimism about the group’s turnaround prospects, citing several key supply lines that have been resecured,providing a vital boost to OK Zimbabwe’s restocking efforts.He said the supermarket chain is already replenishing shelves.

The suppliers that have returned include distributors of Olivine brands, Pearlspot, Newpeak, Competitive Brands and Shapers, Traylish Tissue Company, Schweppes, Champions Foods, Lesel Brands, Crystal Candy, Lesaffre, Flycrew, Dairibord, Montana Meats, Vaitive, Exclusive Brands, Willsgrove, Keffalos, Sable Park, Nestle, Gold, Montgomery, Arenel, Irvine’s, Snowmaster, Bulawayo Abattoirs, Value Visions and Proton Bakers.-herald