Zimbabwe Stock Exchange (ZSE) listed agro-concern, Ariston Holdings, concluded an $8 million rights offer, which saved the group from a going concern crisis amid prospects of returning to profitability.
Ariston, which posted a $226 000 after-tax loss for the half-year ended March 31 2012 yesterday announced the group had secured a strategic partner to shore up business that was teetering on the brink of collapse due to capital constraints.
Group revenues declined by 3% to $6,7 million. Turnover for its flagship Favco grew by 24% to $4,3 million and contributed 65% to Aristons turnover.
Favco posted a profit before tax of $154 000 while other units operated in the red.
South Africa-based Afrifresh, underwriters of Aristons $8 million rights issue, became the major shareholders in the ZSE-listed company following the capital raising exercise.
Ariston announced that within a month after the capital injection, the group retired expensive debt and paid most creditors.
In our 2011 annual report, we commented that in an effort to secure essential refinancing, discussions with a strategic partner were at an advanced stage.
We are pleased to report that these discussions have been concluded and the group managed to raise $8 million worth of capital, reads a statement accompanying the financial results.
As the group was working on the capital raise, some shareholders put together bridging finance in March 2012 and the rights offer injection was received during the second week of April 2012.
It should be noted that as a result of lack of funding, the groups going concern was in doubt.
Following the injection of fresh capital by shareholders, overall prospects are positive.
The groups horticultural division was hardest hit by capital constraints and frequent power outages.
Claremont Estates turnover of $595 000 was 9% of group turnover, an increase of 15% compared to the prior year.
The unit, however, posted a loss before tax and profit of $158 000.