OK to make board changes at EGM

KEY shareholders in supermarket chain OK Zimbabwe are reportedly pushing for a resolution to appoint a new board as a prerequisite to sanction a crucial US$30 million capital raise initiative to reboot the struggling giant retailer, highly placed sources said.

The sources indicated that one key condition for proceeding with the Extraordinary General Meeting (EGM), where shareholders will receive and deliberate on the capital raising plans involving a combination of a rights issue, private placement, and debt instruments — is an accompanying statement announcing board changes set for the next Annual General Meeting (AGM) in June.

“A prerequisite for convening the upcoming EGM to discuss and vote on the rights issue is the simultaneous release of a statement announcing the planned board changes at the AGM,” one source said.

“The Extraordinary General Meeting will only proceed if it is accompanied by an official notification regarding the board’s transition at the subsequent AGM in June.”

The shareholders are reportedly unhappy with the board, which they partly blame for the challenges the retail giant is currently experiencing.

Their primary concern, sources said, revolves around a planned capital raise, with some shareholders arguing that injecting new funds into the company while the current board “remains in place would be counterproductive”.

The company’s major shareholders include Datvest Nominees Foreign, NSSA, Old Mutual Life and Stanbic Nominees, which hold stakes of 19,99, 16,09, 13,36 and 12,9 percent, respectively.

Furthermore, the shareholders reportedly believe the recent return of three former executives of the company will not be enough to improve performance if the existing board continues to oversee operations.

The rehiring of the executives in February occurred against a backdrop of significant operational and financial challenges that had led to widespread stock shortages and a decline in the company’s performance.

In a move described as an “urgent restructuring effort”, the OK board terminated the contracts of the then-chief executive Mr Maxen Karombo, chief financial officer Mr Phillimon Mushosho and supply chain director Mr Knox Mupaya through voluntary separation agreements.

The board then re-appointed Mr Willard Zireva AS CEO, having previously served in the same capacity for over two decades, Mr Alex Siyavora, who stepped back as chief financial officer and Mr Muzvidzwa Chingaira appointed as the supply chain director.

The interim appointments were intended to provide “experienced leadership and stability” and “instill confidence among suppliers” while the board conducted a search for permanent replacements.

Board chairman Mr Herbert Nkala said all company boards were subject to review at AGMs.

All boards are reviewed at every AGM by rotation. No decisions have been made about the rotation for the next OKZL AGM. You will undoubtedly know about this when the AGM circular is made public in the near future,” Mr Nkala said.

But OK Zimbabwe recently advised shareholders and prospective investors that discussions regarding the capital raise “in the sum of up to US$30 million, are now at an advanced stage”.

“The company will then publish a circular to shareholders, incorporating notice of an Extraordinary General Meeting of members for the purpose of considering and approving the capital raise,” said company secretary Margaret Nyuru in a cautionary statement dated May 2, 2025.

OK has been facing operational and financial difficulties. Observers have questioned certain decisions taken by the retail giant over the past few years, including dividend declarations and land acquisitions, which appropriated resources the company could have preserved for leaner periods.

Furthermore, working capital challenges have led to disruptions in the supply chain and a marked reduction in stock availability across its stores. The grocery chain acknowledged its struggle to maintain adequate stock levels as numerous suppliers have ceased providing goods and services due to outstanding unpaid balances.

The scarcity of products has directly undermined revenue generation and overall business performance, with trading levels in the past proving insufficient to cover operational costs.

The company has since warned of a significant loss for the financial year ending March 31, 2025.

The capital raise is aimed at bridging the current funding gap and stabilising the company’s precarious financial position to bolster OK’s balance sheet and improve liquidity, enhance working capital and provide critical support for the company’s planned strategic turnaround.

Mr Zireva said efforts to secure US$30 million in fresh capital were nearing completion, with the retailer aiming to finalise the fundraising by June.

He told Zimpapers Business Hub that considerable progress had been made, with a majority of major shareholders pledging to follow their rights.

“Currently, we are finalising discussions with potential underwriters, and we are targeting to have the whole process completed and cash received before the end of June 2025,” Mr Zireva said.

Faced with operational challenges that led key suppliers to halt business, OK Zimbabwe had previously decided to close six branches by the end of March 2025, resulting in staff layoffs.

However, in a sign of a revised strategy under the returning leadership, the retailer has since reversed the planned closures of its OK Mbare and Entumbane branches as part of its operational reboot.

OK is reportedly burdened with US$17 million and ZiG537 million in outstanding payments to suppliers.

While some challenges faced by OK Zimbabwe have been felt across the wider retail sector, some critics attribute the retail giant’s difficulties to poor management, especially considering that other supermarket chains such as TM and Spar appear to have weathered the storm more effectively.-herald