HARARE (Reuters) -Grocery retailer OK Zimbabwe Ltd’s majority shareholders have agreed to back a $30 million rights issue to cover a “funding gap” and stabilise the company’s financial position, its chief executive said.
“Most of the top five shareholders have indicated interest in following their rights,” CEO Willard Zireva told Reuters on Wednesday.
Earlier this month, the company announced a capital-raising plan including a rights issue, the private placement of shares, and debt instruments to strengthen its balance sheet, liquidity, and support a strategic turnaround plan.
It rehired Zireva as CEO earlier this year to lead the turnaround after he retired more than seven years ago. Previously, also as CEO, he had led the group through Zimbabwe’s tumultuous hyperinflation era of 2008.
OK Zimbabwe has been facing competition from smaller businesses amid their rapid growth. The surge in the informal, or grey, economy in the southern African country has spawned more price-competitive retailers, known as tuck shops, threatening the viability of more established formal retailers.
The company said last month it owed $30.34 million to suppliers, which it was struggling to service. It has shut down five of its outlets this year and struggled to stock several others.
The company’s major shareholders include Datvest Nominees Foreign, National Social Security Authority, Old Mutual Life, and Stanbic Nominees, which hold stakes of 19.99%, 16.09%, 13.36% and 12.9%, respectively.
(Reporting by Chris Muronzi; Editing by Rachna Uppal)
