Ariston Holdings expects to conclude the conversion of $5,5 million debt into equity within two months, bringing an end to a transaction, which has been going on for some time at the horticultural concern.
BY VICTORIA MTOMBA
The money is owed to its major shareholder, Origin Global Holdings, which has a 68% equity in the company.
The $5,5 million is part of the company’s $10 million long-term debt.
Speaking on the sidelines of the company’s annual general meeting last week, Ariston’s chief executive officer, Paul Timothy Spears said the company has been facing challenges in concluding the transaction.
“The majority shareholder has agreed to convert the debt into equity and the issue of dilution will be concluded in the next six weeks and that is what we are struggling with,” he said. If the transaction is concluded, Origin will shore up its stake in the company and some shareholders will be diluted.
Spears said the company is also in the process of converting short-term debt into medium-term debt and has already negotiated with a local bank.
- Chamisa under fire over US$120K donation
- Mavhunga puts DeMbare into Chibuku quarterfinals
- Pension funds bet on Cabora Bassa oilfields
- Councils defy govt fire tender directive
Keep Reading
Spears said the company has a gearing ratio of 110% and the restructuring of the short-term into medium debt would reduce that ratio.
Gearing ratio is a measure of financial leverage, demonstrating the degree to which a firm’s activities are funded by owner’s funds versus creditor’s funds. A low geared company would be able to pay off debt several times over and would be considered low-risk by both investors and lenders.
Short-term debts owed to a number of banks amount to $5,5 million.
“We have opportunities to improve our funding situation. There are medium-term funding opportunities, with interest rates in the low teens and single digits,” Spears said.
Spears said electricity supplies had improved since December and the company’s hydro electricity scheme is being rehabilitated.
He said the weakening of the South African rand has been affecting the market as produce from South Africa was getting into Zimbabwe at cheaper prices.
For the financial year ended September 30, 2015 the company posted a loss of $1,7 million from a profit of $1,5 million in 2014 same period.
