PG Industries Zimbabwe has engaged BancABC and Imara Asset Management to jointly underwrite two equity offerings worth $11,2 million, which may see TA Holdings bulking up to a controlling interest in its associate.
TA Holdings, which acquired 30% of PG Zimbabwe last year, has been chasing a deal to buy ABC Holdings’ 15% equity interest in the diversified construction company and gain board control.
BancABC and Imara Asset Management may jointly acquire as much as 35% of PG Industries Zimbabwe should shareholders fail to come up with $11,2 million from their purses — $6,720 million through a convertible debenture and $4,480 million through a rights offer.
The transactions were mooted to walk-stick the financially distressed conglomerate back to viability, and calm its recapitalisation and refinancing qualms that started when the country dollarised last year.
PG has disclosed that the major shareholders of the company are prepared to follow their rights, while BancABC and Imara Asset Management have made an undertaking to acquire the leftovers, which may amount to about 35% of the issuer’s issued ordinary share capital.
“The company has secured irrevocable undertakings from ordinary shareholders, holding at least 65% of the issued ordinary share capital of PG Industries Zimbabwe to follow all of their rights and entitlements in relation to the rights offer and the convertible debenture,” PG said.
The equity offerings could see TA Holdings asking BancABC and Imara Asset Management for a deal if minorities balk at the deals.
Issued with a par value of $1 per unit and at a coupon rate of 10% per annum, the convertible debentures have a tenor of 60 months from the date of allotment.
Shareholders are free to convert the debt instruments into equity after 12 months or redeem them for cash on maturity if they are unable to exercise their right to the first option within 48 months.
The bulk of the funds raised — about $6,113 million — will be used to retire high-cost short-term debt, while only $1,234 million will be committed to capital expenditure under phase two of its of its recapitalisation programme.
Working capital will have a boost of $3,1 million.
PG plunged into a debt overhang when it borrowed $4,5 million last year to pay off creditors and restock Zimbabwe operations under phase one.
The largest construction and allied industries conglomerate in the country, which operates five divisions, is already under restructuring, ahead of the funding deals.
The company plans to reduce its exposure to heavy manufacturing to concentrate on distribution and light manufacturing operations and would be phasing out J&F and Msasa Timbers and merging the units with PG Timbers, DST or PG Building Supplies.