PG Industries Zimbabwe is seeking shareholder approval for its proposed debt restructuring exercise, which will see the disposal of operating assets in Zimboard and its subsidiary, Plate Glas
The restructuring largely rests on the approval of its key shareholders at an extraordinary general meeting (EGM) scheduled for the end of the month. If approved, the company hopes to pay off its huge debt while retaining over $12 billion to be converted to a five-year 20% fixed interest debt instrument.
PG is listed on the Zimbabwe Stock Exchange.
In Zimboard, the company intends to dispose of fixed assets which include brand and trade names relating to its manufacturing business to a joint venture company (JVCO).
If the plan is successful, the JVCO would acquire the latter’s assets for US$4,3 million, which will in turn court PG Bison of Mauritius to subscribe to a 49% stake in the venture company at a fee of US$2,1 million, while retaining a controlling stake of 51%.
PG’s assets in Plate Glass, according to a notice to its shareholders, will be acquired by two subsidiaries operating under two venture companies still to be formed.
The two companies are expected to pay R19,6 million ($19,6 billion) for the assets that include brand names, trade names and inventories related to the operation.
The rescue deal will also seek central bank approval for the coming in of PG South Africa (PGSI) to take up 51% equity in the two venture companies.
If the company’s shareholders approve the transaction, it will see PGSI paying R9,99 million for its stake while Plate Glass will retain a 49% stake on completion of the deal.
The proposal comes after the company successfully implemented a similar restructuring in 2001 where it focused on the disposal of assets to cut debts.
However, the company’s fortunes have taken a dive from its 2001 heydays to a position where its debt has ballooned from $22 billion in the first half of 2004 to over $40 billion towards the end of 2004.
The financial crisis led to the toppling of chief executive officer, Gerald Mujaji by financial director, Nyasha Zhou.
PG Zimbabwe majority shareholders, the Lubner family, sold their controlling stake in the company to a consortium, Laserson Investment, led by Mujaji and Zhou in 2001.
Laserson Investment is now the single largest shareholder in the company with a 27% stake followed by Prestige Investment with a 20% stake.