A debenture is a certificate or voucher acknowledging a debt and whoever accepts it is entitled to a unit of ownership interest in a corporation or financial asset or an unsecured loan offered to a company with no collateral but attracts a higher rate of interest to its creditors.
Convertible debentures were issued to all registered PGIZ shareholders last Tuesday, pro rata to their shareholding. The issued convertible debentures have five year tenure from the day of allotment.
Each of the 6,72 million convertible debentures was valued at US$1 with a 10% coupon per annum payable semi-annually on June 30 and December 31 until redemption or conversion to the registered holder of the convertible debentures.
PGIZ said after the five year tenure all unredeemed and unconverted debentures would be repaid.
“The CDs (convertible debentures) will be convertible, in part or in whole, to ordinary shares in
PGIZ, at the election of the holder, at any time after 12 months from the allotment date at the conversion price of US$0,033 (three point three United States cents),” said PGIZ.
PGZI shareholders also approved the raising of US$4 484 420 through a renounceable rights offer.
Shareholders approved the issuance of 186 850 852 ordinary shares of nominal value of US$0,001 each at a subscription price of US$0,024.
Shares were issued to shareholders at the ratio of 6,42 new ordinary shares for every 10 ordinary shares held in the issued share capital of the company.
A renounceable right issue is offered by a corporation to shareholders to purchase more shares of the company’s stock and it is usually at a discount.
Renounceable rights have a
value and can be traded and the stockholders that would have exercised their right have three choices, to buy more shares, sell them on the market or they can pass on taking advantage of their rights.
An analyst with a stock broking firm said the illiquid market was dictating the pace for industry and they had to come up with strategies to raise funds for recapitalisation.
“What PGIZ has done is expected because the question is what do you do when the traditional lenders are either unable or are offering very expensive funds,” said the stockbroker. “The most logical thing to do is to go to the same shareholders and ask them to come in and raise their stakes in the company and at the same time breath life.”
The stockbroker said what has been happening at PGZI, after it was taken over by TA Holdings, are signs that the market is dry yet there is a growing appetite for revival.
Companies have been coming to the market since the adoption of multi-currencies last year to raise capital after hyperinflation wiped out working capital.
OK Zimbabwe, the country’s second largest retailer, NMB and Star Africa are some of the companies that have had to raise capital on the market.
— Staff Writer.