PG INDUSTRIES Zimbabwe (PG) is seeking shareholder approval for a $3.5 million capital raise in a bid to avert liquidation, the company said in a circular on Friday.
The hardware retail group plans to restructure its balance sheet through a scheme of arrangement with various lenders and creditors, restructure its business to improve efficiencies and raise the fresh capital.
As at September 30, the company’s balance sheet was characterised by a $5.3 million worth of bank loans while creditors were owed $18.7 million. It is also saddled with $6.72 million worth of debentures and a negative equity position of $3.3 million.
“The company is technically insolvent, and unless it enters into an arrangement with creditors, is likely to go into liquation,” said the company in a statement to shareholders on Friday.
As part of a private placement, the company is seeking to place one billion new ordinary shares with Old Mutual Life Assurance at a price of $0.001 to raise $1 million.
BancABC agreed to advance PG a loan of $1.1 million while the company secured buyers for $950,000 worth of properties.
PG is also currently in discussions with various banks to secure an additional $440,000 which will be used to secure facilities in the form of guarantees or letters of credit.
Meanwhile, the company held a scheme of arrangement meetings with its creditors on January 24 whom it owes $5.3million (secured lenders) of which $934,000 was cleared prior to the meeting.
Secured lenders opted for a swap of the debt with immovable properties and a deferred payment plan to settle the amounts at an interest rate of 12 percent per annum.
PG said at least $3 million would be settled through the swap of debt option while the balance would be settled through the deferred payment plan.
The company proposed that debenture holders convert them to PG ordinary shares, subject to shareholder approval.
Debenture holders agreed to convert $6.72 million worth of debentures plus accrued and unpaid interest to ordinary shares of a nominal value of $0.001 each at a similar conversion price.
The conversion price is based on a 60-day volume-weighted average price as at 30 December 2013, the last day before the company’s shares were suspended from trading on the local bourse.Advertisement
Statutory creditors who are owed over $1 million will not form part of the scheme and instead bilateral settlement plans ranging from 12-36 months have been arranged with the various authorities.
The company will hold a members’ scheme meeting and extraordinary general meeting on March 14.