Zimpapers Logo

Oliver Kazunga Senior Business Reporter
PG Industries Zimbabwe (PGIZ) says it has so far raised $3,2 million in new funding as the directors continue looking for long-term solutions to the negative balance sheet.

In an update on the scheme of arrangement, PGIZ company secretary Kudakwashe Waniwa said the new funding had so far been raised through different initiatives.

“So far, the company has raised $3.2 million in new funding through property disposals; new bank facilities; and ordinary share capital injection. Despite these efforts, the company still has a significant working capital gap.

“The directors continue to look for lasting solutions to the company’s negative balance sheet,” she said.

In December 2013, PGIZ proposed a scheme with its shareholders and creditors.

The scheme was then registered in April 2015.

On implementation of the scheme, she said, the Secured Lender’s Scheme had been fully implemented while debenture holders’ Scheme had debentures and accrued interest totalling over $7 million.

“Debentures and accrued interest totaling $7,162,530 were converted to ordinary shares at a conversion rate of $0,001.”

Turning to the Secured Supplier Scheme, she said due to the firm’s inability to meet trading terms, the secured supplier is no longer supplying product on credit.

Waniwa said on the concurrent creditors’ scheme, her company was unable to make quarterly payments to the respective creditors due on October 16 owing to cash flow constraints.

PGIZ shares were suspended from trading on the Zimbabwe Stock Exchange (ZSE) in December 2013 to allow for the scheme to be sanctioned.

The firm has engaged the ZSE to have its suspension lifted following the successful implementation of its Scheme of Arrangement.

The company was suspended from trading on the local bourse after it breached listing requirements (Section 1.7 of the Stock Exchange Listings Requirements) in respect of the implementation of the Scheme of arrangement, which was aimed at restructuring its balance sheet.

PGIZ has over the years been struggling to fund working capital in spite of previous capital raising initiatives.

In a bid to boost its working capital position, PG Industries had to rely on short term expensive debt to fund operations.

This resulted in decreased sales and consequently persistent losses.

Last December, PG Industries restructured operations as part of the scheme of arrangement.

It closed three of its branches, leaving its network at 15.

The decision to reduce its network was in response to reduced business in some parts of the country caused by subdued demand for building materials and related products.

“Although demand in the construction industry has remained relatively healthy, PGIZ’s businesses haven’t been able to fully exploit the opportunities. The majority of suppliers are availing products on a strictly cash-upfront basis.

“Modest capital raised by PGIZ has had some positive impact. Zimtile has been operating profitably since June 2015. Production and sales volumes of concrete tiles have gone up, capacity utilisation and efficiencies keep improving,” said Waniwa.