HORTICULTURAL concern Interfresh will delist on the Zimbabwe Stock Exchange if shareholders approve a special resolution for the company not to be a public firm at an Extraordinary General Meeting (EGM) on December 2013
According to notice to shareholders on Tuesday, Interfresh said it felt the company’s shares had consistently traded at a significant discount to net asset value of and other valuation methods.
The company said raising equity at current valuation has proved rather limiting. Only US$3 million was raised through the July rights offer this year.
“The company does not have any significant borrowing capacity which can be achieved at reasonable cost. The company needs to raise equity capital and convertible debt from private equity and structured finance markets using valuation methods other than the stock market,” said the company’s chairperson Chipo Mtasa.
“Post delisting directors want to raise at least US$6 million equity and structured funding, aggressively restructure and grow the business and will re-list the company at an appropriate future date in the medium term.”
CEO Lishon Chipango sees the group returning to profitability by 2014 once additional structured funding is raised.
“The additional capital raising should happen in the next couple of months but before the end of the year,” Chipango said.
He said US$3 million his company was raising via a rights issue was not enough to meet the capital needs of the company.
The US$3 million is expected to improve trading capacity and restructure the balance sheet by reducing debt, improve solvency ratios and provide scope for procuring long-term growth strategy.
The rights offer is also expected to enhance Interfresh’s capacity to consolidate the gains of the company’s growth strategy.
“The first five months of 2013 were nothing dramatic as we have been under-capitalised and facing cash flow constraints hence the need to recapitalise. However, yields were good and we expect to at least break even by the end of the financial year,” said Chipango
He said Interfresh would mainly focus on citrus processing which consists of the juicing factory and the bottling plant.
Early this year, the ministry of Lands and Rural Resettlement allocated approximately 1,600 hectares of the Mazoe Citrus Estate to President Robert Mugabe’s wife, Grace.Advertisement
According to Interfresh’s circular to shareholders, the consequent loss of revenue and assets impairment has left the balance sheet in need of restructuring through an increase in equity funding.
Interfresh said the land listed for compulsory acquisition by the government constituted 46 percent of Mazoe Citrus’ total arable land, which translated to 30 percent of budgeted revenue.