AGRICULTURAL and allied food products company, Interfresh Holdings Ltd (Interfresh)’s shareholders have approved a proposal to delist the company from the Zimbabwe Stock Exchange (ZSE) effective December 31 and get better value ahead of a transaction to raise US$6 million in fresh capital.
Interfresh will now do its valuation outside the stock market regulations and maximise value to reduce the diluting effect of the US$6 million transaction, company CEO Lishon Chipango told journalists after the company’s extraordinary general meeting on Wednesday.
“Raising capital using stock market valuation is difficult. When we did the rights issue to raise US$3 million, we had a diluting effect of 75%. In other words, if a shareholder did not follow his interest he/she had it diluted by 75% and yet if you had used net asset value that effect will have been diluted by 15%,” Chipango said.
“In this situation it won’t be at that level of 15% but it will be somewhere realistic.”
This follows a similar statement by Interfresh chairperson Chipo Mtasa that the company was limited in terms of raising capital at current valuation given that its shares had been trading at a discount to net asset value.
The US$6 million is to be raised via a mix of equity, convertible debt and structured instruments which will have minimal dilution. Chipango said he hoped to relist on the local bourse in about five years, adding this would depend on whether the environment would have become conducive.
Mtasa said most companies on the stock market except the top 10 counters were affected in terms of their value by the country’s poor performance in terms of doing business.
The evaluation derives from country risk and all these issues of liquidity come in because there are no buyers and if there are no buyers no one is pushing demand, Chipango said.
“It’s all to do with the macroeconomic environment tied with stock market performance except for the real big boys but even if you talk to them they will probably say the same,” she added.
“The other aspect is that there is no money in Zimbabwe and all the capital you are raising is coming from external sources.”
Chipango said if the situation persists, more companies were expected to pursue the same route when raising capital going forward.
Interfresh becomes the third company to delist from the ZSE owing to a myriad of operating challenges which have seen industry capacity utilisation falling to below 40% in 2013.
Two other companies, Caps Holdings and Lifestyle Holdings, delisted this year.