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14/08/2013 00:00:00
by Business Reporter
Willdale eyes deal with financier

LISTED Brickmaker, Willdale Limited, is in talks with an unnamed financier over capital injection amounting to US$8 million for the refurbishment of its plant and acquisition of new equipment as competition in the sector intensifies.

The company is hoping that a turnaround programme currently under way would be successful and that support from current lender would not result in any going concern problems.

In a statement to shareholders on Wednesday, company secretary Mavuti Munginga said negotiations were still on-going with the potential investor and advised shareholders to exercise caution when dealing with the company’s shares.

“Further to a cautionary statement published on 23 July, the directors of Willdale Limited would like to advise shareholders and the general public that negotiations are still ongoing with a potential investor whose outcome have a material effect on the business and share price,” he said.

“Shareholders are therefore advised to continue to exercise caution and to seek professional advice when dealing in the company’s shares.”

At the company’s annual general meeting (AGM) in April, board chairperson Alex Jongwe outlined plans for a US$8 million capital raising exercise, saying some local financial institutions and banks had shown interest adding the firm was also looking at moving to cheaper long-term loans from external lenders.

About US$2 million is required for the purchase of mobile equipment as the company currently hires at rates that are double those of South African suppliers.

All-weather facilities require US$5 million, while general working capital requirements are at US$1 million.
Jongwe said the new funding would also enable Willdale to grow and reduce costs.

“We are forecasting further positive growth in revenues and a positive profit margin from increased throughput in the next financial year,” he said.

“This will depend on the availability of funding to refurbish plant and acquire sufficient mobile equipment. Negotiations are at an advanced stage with a potential long-term financier to provide the required funding,” he said.

Jongwe said Willdale had regained its market share, with demand exceeding supply, and customers who had moved elsewhere starting to come back.

He said the company had realised that a survey on demand for local clay bricks was long overdue and getting a comprehensive survey done was part of the company’s strategic plan.


“Although some business has been lost to the cement brick trade due to lack of supply, the preference in this market is for clay bricks,” he said.

At the time, Jongwe said current production numbers were at between one million and 1,5 million bricks a month, adding the company was working to a dry season high of 12 million bricks.

He added the average production historically was between 3,5 million and four million a month while the plant capacity was over 12 million.

Willdale suffered a loss of US$613,585 for the six months to March this year compared to another loss of US$516,991 endured during the same period last year due to high plant and equipment repairs which resulted in low throughput and poor margins.

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