HomeBusiness DigestNDH to raise cash for additional projects

NDH to raise cash for additional projects

THE National Discount House (NDH), which recently announced plans for a rights issue to raise cash to meet new capital requirements, is now planning to raise additional cash for other projects, businessdigest established this week.

NDH is considering increasing the amount

it intends to raise from its upcoming rights issue to ensure future growth and stability apart from the minimum capital requirements set by the Reserve bank, businessdigest gathered this week.

In an internal memo seen by businessdigest, NDH said it was considering increasing its rights offer by an undisclosed amount.

“The review will set the company on the path of future growth and stability,” NDH said.

Shareholders are expected to decide on the revised rights offer at an extraordinary general meeting (EGM) on August 30.

Discount houses now need more than $500 million to ensure full compliance with the US$5 million minimum capital requirements for discount houses effective by end of September.

NDH had initially launched a $100 billion rights issue in a bid to recapitalise the institution in line with Reserve Bank requirements.

The issue was to consist of 185 185 185 ordinary shares with a nominal value of $0,10 each in the authorised share capital of the company to existing shareholders of the company’s ordinary or preference shares at a subscription price of 540 cents (old currency format) per share.

The internal memo by the company’s board said a revision of the rights issue would place the financial institution’s capital level above prescribed requirements.

“On the back of the proposed rights offer the board is confident that should the prevailing market conditions remain materially unchanged, NDH should be able to comply with and exceed the minimum capitalisation requirements of $500 million,” the institution said  in the internal memo.

The main purpose of the rights issue is to augment the financial institution’s capital so as to ensure compliance with new capital requirements of $500 million for discount houses that comes into effect on September 30.

The amount raised would set the company on the path for future growth and stability, six months after the discount house resumed operations after being caught up in a banking crisis that resulted in the closure of at least 10 financial institutions over the past two years.

The discount house experienced severe liquidity challenges in December 2003 owing to its exposure to unsound financial institutions.

The discount house also faced solvency problem emanating from non-performing insider loans.

NDH resumed operations on February 16 2006, following clearance from the Reserve Bank after a reconstruction exercise. — Staff Writer.

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