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Brick maker Willdale to raise $3 million
09/04/2014 00:00:00
by Business Reporter

LISTED brick maker, Willdale yesterday announced that it will embark on a rights issue to raise US$3,25 million.

The amount will be in the form of 10 percent semi-annual redeemable convertible cumulative share.

The company, last year said it wanted to raise US$8 million if the company was to return to profitability after recoding losses that past two year.

It is anticipated that the construction industry would come back to life should the political environment become certain that boasting the company’s operations.

Efforts to capitalise the company continue to be pursued with the company saying it remains confident of the future of the industry in general and the company in particular.

In a circular to shareholders on Wednesday, Willdale says an EGM will be held on May 6 to seek approval for the rights issue which will be underwritten by Old Mutual Life.

Willdale is on record saying it needs US$5 million for an all-weather drying facility to reduce the time for drying green bricks from 21 day to 45 hours and US$1 million for working capital.

A total of US$2 million was required for the purchase of heavy machinery as Willdale had been paying contractors twice the rate of South African manufacturers to hire equipment.

The capital raised would be used to improve production volumes, restructure its balance sheet and in the process enjoy economies of scale.

Willdale is also looking at plant rehabilitation and investing in mobile equipment which would lead to a 50 percent labour reduction from 500 to 250.

While the environment in Zimbabwe is depressed due to liquidity challenges, Willdale says it has not faced demand shortage with private housing construction acknowledged by the cement producers to be robust.

The main challenge is recapitalising antiquated equipment and the group said 50 percent of the funds will be used to refurbish the existing plant.

The shares are being offered for cash at a subscription price of US$1 each payable on the basis of one 10 percent semi-annual redeemable convertible cumulative preference share for every 546.24 ordinary shares held.

If conversion is was to take place at the NAV of 0,78c the potential dilution impact would be 19 percent.

The company said negotiations with a long-term financier to provide funding to refurbish its plant and acquire sufficient mobile equipment was at an advanced stage.


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