PELHAMS Ltd intends to acquire a controlling stake in an export driven furniture-manufacturing company.
tion to be partly paid for in cash is meant to boost the company’s earnings, at the same time allow it to maximize on exports.
“There is a strategic need to acquire a controlling interest in an export driven furniture-manufacturing company to be partly paid in cash,” Pelhams chairman Mukudu Chidawu said.
He said the company’s directors had already approved the venture but shareholder and regulatory approval was still required. “The directors accordingly approved the acquisition of a manufacturing subsidiary for both cash and new shares,” said Chidawu.
He said there was need for the acquisition to be successful, as this would allow the company to fund its future operations.
“These efforts are subject to shareholder and regulatory approval, but need to be successful for the acquisition to occur and for the company to be able to fund its operations into the future without losing critical mass,” said Chidawu.
He said shareholders would be informed about the company’s prospects and recommendations about the proposed deal.
Chidawu said the company needed to recapitalise and increase its earnings from business units as the current level, cost of borrowing was unsustainable.
“In the absence of re-capitalisation of the company and an increase in earnings base, the current level and cost of borrowing is not sustainable,” said Chidawu.
He said directors had approved the recapitalisation drive and when complete this would allow the company to take advantage of the positive changes beginning to take place in the macro-environment.
He said if the company manages to sustain the proposed changes this would enable it to produce better results inhard times.
“If the current changes can be sustained, the company hopes to use the lessons it is learning during the hard times to produce better results,” Chidawu said.
He said with this in mind the company would forge ahead with the opening of more stores in strategic positions.
Pelhams managed to record an after tax profit of $9 billion, the result representing an improvement of 296% to the previous year.