Kingdom Financial Holdings Limited (KFHL) directors are seeking shareholder approval to raise $25 million through a combination of rights issue, private placement and a public offering at an extraordinary general meeting scheduled for next month.
Shareholders will be expected to pass resolutions to give a nod to the capital-raising initiatives proposed by the board.
In a notice of the extraordinary general meeting, group company secretary Daniel Makono said shareholders will be asked to consider and if deemed fit, to pass, with or without modification, resolution to raise the funds.
“Directors, be and hereby authorised, to raise $15 million through the issue of 493 421 053 ordinary shares in capital of the company at an issue of $0,0304 per share using a recapitalisation model involving raising $4 500 000, $7 500 000 and $3 000 000 through a rights offer, private placement and public offering respectively,” reads the notice in part.
Shareholders will also be asked to raise $10 million as a special resolution through the issue of 6 640 106 redeemable convertible preference shares at an issue price of $1,506 per share.
Makono said directors were seeking approval to be allowed to enter into negotiations with holders of ordinary shares in Kingdom Bank and Amara Tech in a bid to acquire the issued shares.
Kingdom will also ask shareholders for permission to list the issued shares in the capital of KFHL post the rights issue, on the Zimbabwe Stock Exchange (ZSE), Johannesburg Stock Exchange (JSE) and or stock exchange of Mauritius subject to obtaining necessary regulatory approvals.
KFHL recorded an increase in profit after tax for the six months to June 30 2011 to $2,3 million up from $1,5 million in the comparative period last year.
Zimbabwean operations contributed about 71% to the group’s profit before tax.
The group said it was finalising plans to recapitalise its operations, which will further strengthen the capital base — in particular the key subsidiary Kingdom Bank — enabling it to comply with the minimum regulatory requirements.
“The recapitalisation has reached an advanced stage and we will be releasing details of how KFHL intends to raise additional capital so that its operating units are fully funded to be able to take advantage of business opportunities in Zimbabwe and the region,” KFHL said.
It said Kingdom Bank managed to perform strongly despite the market competition and an illiquid market.
At its annual general meeting in June KFHL said the group had secured lines of credit amounting to $50 million, but saw the figure rising amid promising inflows from various parties.
“We do not have a limit as to how much money we want to raise through lines of credit. We will channel the money towards sectors of the economy we feel need help to increase their capacity utilisation and operations. You can never prosper as a brand without the economy or nation prospering,” chief executive officer Lynn Mukonoweshuro said.
There has been a lot of interest in Zimbabwe by foreign investors since the economy was dollarised, she pointed out.
“As you will appreciate, the level of growth and demand in the economy has a direct correlation to the activity of the banking sector.
“Currently, the economy is still experiencing muted growth, but we believe that over time, activity will improve, and the sector will be ready to meet the demand of credit and funding to support this growth,” Mukonoweshuro added.
She said the challenges facing the banking sector included lack of liquidity which was constraining on-lending activities to customers. But despite the sector-wide liquidity crisis, Kingdom was returning to profitability.
The group is buoyed by its solid performance for the six months ending June 30 2011.