Key CFI Holdings Ltd shareholders are backing a US$20 million capital-raising exercise to recapitalise the group.
Hamish Rudland, a 40% equity holder in Zimre Holdings Ltd, a group that holds a majority stake in CFI, told businessdigest yesterday that he would follow his rights in a US$10 million rights issue.
Rudland said although shareholders were pushing for a capital injection of US$20 million into CFI, the funds would be split into a US$10 million loan and a US$10 million rights offer.
Asked if other shareholders are going to follow their rights, he said, while he hoped they would do so, others did not share the same vision with the local shareholders.
“We hope they are (following their rights), but we are dealing with a foreign shareholder who has other ambitions for the company and does not share the views of the local shareholders who want the company to perform and succeed and create jobs and add to the fiscus of the country,” Rudland said.
British business tycoon Nicholas van Hoogstraten also owns a significant equity stake in CFI.
Rudland said all major shareholders in CFI had agreed to have a back-up underwriter to inject the funding in the event of shortfalls.
He described the “structure” as “fair and transparent”, adding “the bankers are in full support of the structure.”
“If shares are available Zimre will underwrite its share, the company has great potential and will reward shareholders in future, we are positive investors and operators and will steer this company back to profitability and returns for shareholders,” he said.
Rudland said the funds would be utilised to lift production in all operations.
“The market is still relatively small. So we believe if carefully managed and reviewed, the cash will go a long way in turning around most of the operations,” he said.
Rudland said there was need for some rationalisation, adding the exercise was an ongoing process which is already in motion.
“Every unit must make profits and stand alone, and prove to the board that it will perform if given adequate cash and capacity to produce,” he said.
Rudland noted the board had agreed to eliminate short-term debt, but this would be tabled at an imminent EGM.
He added that the group was not looking at disposing any stakes in divisions at the moment.
“We will not dispose of any stakes of any divisions. However, we are looking at partnering where the partner brings focussed intellectual property and real value to the partnership. The group is very diverse and the opportunity for value addition between units is possible, but there needs to be focus on getting each unit productive and profitable before we can integrate and value-add down the line.”
Rudland and his consortium snapped up a 40% equity stake in Zimre Holdings Ltd (ZHL) recently after a rights issue. He told businessdigest in June that shareholders were looking at raising capital through various instruments.
Rudland said he wanted to see the group making a profit, but admits recovery will be slow.
“We aim to make the business profitable and pay dividends, if it is adequately capitalised through equity, there is no reason that is will not make profits. Recovery will be slow, but we will only make decisions and actions based on making profits,” he said.
Rudland said the group’s operations were seriously affected due to working capital constraints. He, however, said the company’s plant and equipment and systems were still intact.
CFI in June sought shareholders nod to ratify exceeded borrowing powers in FY14 and to borrow to a cap of not more than US$20 million in FY15.