LISTED healthcare concern, Medtech Holdings, will next week issue new shares on the market in a bid to raise US$1,6 billion to recapitalise its business.
According to an internal memorandum seen by businessdigest, a total of 1 608 300 884 shares will be issued on Thursday.
Insiders at the Zimbabwe Stock Exchange on Tuesday said the company had already applied to list the shares on January 27.
Medtech has, since the dollarisation of the economy in January 2009, been restructuring to improve its capacity utilisation. The company sold 49% equity of its subsidiary, Medtech Distribution to Titanium Marketing and Distribution Ltd for US$100 000.
Titanium, owned by Afzal Motiwala, a non-executive director of Medtech Holdings, injected US$100 000 into the company for the shareholding. As part of the deal, Titanium provided skills, debt finance and new product lines.
The pharmaceutical company also said the board had taken a decision to dispose of its plastics manufacturing business and potential buyers were being sought. The business is facing stiff competition from imported medical consumables and disposables.
Local hospitals are importing pharmaceuticals from India and South Africa, which are cheaper compared to locally produced products.
The post-dollarisation business environment has necessitated the recapitalisation of most businesses as companies reposition themselves for growth.
With the inflation tide gone and the nudity of many companies now visible analysts said financial results announced last year showed that while dollarisation had improved companies’ operations, there was not much in terms of profits as reflected in the interim and year-end financial results.
Economic analyst Farayi Dyirakumunda said most strategies being employed by companies entail a combination of debt and equity to meet both working capital and capital expenditure requirements.
“Companies are also looking at international capital as an avenue to re-capitalise themselves.
Local companies however need to look beyond just capital injection but also put in place measures to restructure and streamline their business models to eliminate inefficiencies and focus on core business,” said Dyirakumunda.
Dyirakumunda said disposals of non-core units, training and human capital development, business process outsourcing and strategic alliances were examples of measures that were being employed to complement the injection of capital.
Listed companies such as Cairns, CFI, Willdale, ZBFH, Zimre Holdings Ltd and Bindura have formally announced that they are looking to recapitalise to consolidate their operations.
Firms that have successfully raised money for recapitalisation this year are OK Zimbabwe, Star Africa, FBC Holdings and NMB.
Obrian Ruyimbe an economist with Premier Finance Group said dollarisation had opened Zimbabwean industries to the vagaries of the world economy.
Ruyimbe says companies are now realising that the technology supporting the country’s manufacturing industry needs fresh capital for retooling purposes.