PELHAMS’ $112,9 billion rights issue, which was launched in a bid to fund credit sales, was undersubscribed, with 78,6% of the shares on offer being taken up.
The company managed to raise $88,7 billion.
Under the rights offer, a total of 376 250 0
00 ordinary shares were issued, of which 295 473 915 were taken up.
The balance of 80 776 085 was taken up by the underwriters, Old Mutual.
The rights offer shares are being listed on the Zimbabwe Stock Exchange from April 10.
Farai Dyirakumunda, an analyst with Interfin, said although the balance of 80 776 085 ordinary shares was taken up by the underwriters, the rights issue was undersubscribed.
In the past two years, Pelhams incurred losses from trading and this was largely due to problems in funding credit sales.
“The fundamental problem with Pelhams’ business has remained the funding of credit sales,” said Pelhams chairman, Oliver Chidawu, in a circular to shareholders.
He said debt problems and associated losses of the past two years had resulted in a loss of market share to competitors.
Last year Pelhams had to mortgage its property at 20% of its value to secure interim funding of credit and the losses the company had incurred related to lack of critical mass.
Chidawu said a recapitalisation of the business to fund credit was expected to result in a return to profitability and cash generation.
“The first target will be to regain much of its lost market share through the continued offer of properly funded credit and the aggressive production of new exclusive lines as the company restructures,” he said.
The rights offer was made on the basis of five new ordinary shares with a nominal value of one cent (US$0,01) for every six ordinary shares already held, at an issue price of $500 per share.