LISTED clothing company Edgars’ Stores controlling shareholder, Bellfield Ltd, is reportedly interested in disposing of its 41,51% controlling stake in the retail chain.
Bellfield was until recently the highest shareholder in the company with a 55,98% stake, before it opted to cede 35,6 million shares to its employees.
The employees’ shares which are housed under the Zimedgroup Employee Trust currently constitutes 14,47% of the listed group, making them the second single largest shareholder in the company followed by Old Mutual Investment Corporation with 13%.
The deal is said to have been financed by funds from a dividend payment which the company had not paid out to its shareholders, a position which the group-managing director, Raymond Mlotshwa confirmed.
He said Bellfield Ltd had not received any cash payment from the company employees.
“It was a simple transfer with no money involved but financed by a dividend, not paid out,” said Mlotshwa.
He however said he was not sure of the controlling shareholders’ plans with regards to its remaining stake in the company, which currently stands at 41,51%.
On whether the company’s top brass would be covered in the share scheme, Mlotshwa said the shares were aimed at all permanent employees of the company regardless of their positions.
“As long you are a permanent employee of the company, you will benefit from the scheme and the top management of the company is permanent thus it would also benefit,” said Mlotshwa.
He said Edgars’ cash position had resulted in the company searching for investment opportunities that would complement its current operations.
Edgars’ ended the 2004 financial year on a cash position of $58 billion because of a slow demand in operational capital, which only grew by only 43%.
He said the reduced operational expenses had presented the company with new investment opportunities which it would explore.
“It’s either we were spending very little or our operational requirements were reduced, but the cash position has presented us with an investment opportunity which we will have to explore as a company,” said Mlotshwa.
He said the proposed investment would allow the company a larger share of the retail sector, broadening its business base.
Mlotshwa said despite the operational challenges at the Carousel division, the company remained confident that the business unit would eventually contribute effectively the group earnings. The division is the manufacturing arm of Edgars.
“The unit continues to face operational challenges such as a lack of foreign currency for raw material importation,” he said
“The situation was worsened by a depressed demand of its products on the local market of which we expect to overcome in the current financial year,” said Mlotshwa.
He said the operations of the company’s other retail units were satisfactory, with the company’s Edgars’ brand registering a growth in sales of 317%.
He said the retail unit growth had been enhanced by the company’s credit facility to its customers.
“Edgars’ registered a significant growth rate in sales and this was benefited mostly from the credit sales in the shops,” said Mlotshwa.
He however said sales from the Express retail unit continued to suffer from the cheap clothing imports on the local market, which were lowly priced.