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Turnall mulls debt to equity swap


LISTED Turnall Holding Limited is reportedly engaging its creditors for a possible debt-to-equity swap deal as it moves to ward off marauding creditors jostling for the company’s assets, NewsDay has established.



The transaction has to be approved at a scheme meeting, which is a court-approved agreement between a company and its shareholders or creditors that may affect mergers and amalgamations and may alter shareholder or creditor rights.

The use of scheme of arrangements is seen as a flexible and effective way of implementing a broad settlement plan between a technically insolvent company and its creditors.

The company wrote to its creditors proposing that they receive shares in full and final settlement of the outstanding balance with the number of shares basing on the conversion price determined by the intrinsic value of the company, insiders have said.

Turnall gave creditors an option to either receive and hold shares or alternatively match the receipt of shares with the immediate disposal of the same shares to a third party.

The tile and pipes manufacturing firm also proposed to some of its creditors to pay unsettled debt after 36 months, with an option for a certain percentage of the outstanding balance being settled through the attainment and disposal of corresponding value of shares in Turnall.

If the scheme is approved, it will give Turnall breathing space as some creditors had obtained writs of execution to attach assets of the building and associated industries concern.

When issuing a writ of execution, a court typically will order a sheriff or other similar official to take possession of property owned by a judgment debtor.

The company issued a cautionary statement on Monday, saying it was involved in discussions geared towards restructuring its balance sheet.

“The directors of Turnall Holdings Limited wish to advise shareholders and the investing public that the company is engaged in discussions, relating to the restructuring of the company’s balance sheet. The outcome of the discussions might result in a material impact on the value of the company’s shares,” the company said on Monday warning the investing public should therefore exercise caution when trading in the company’s shares.

According to the company’s half-year financial results for the period ending June 30, 2016, total current liabilities were $28 104 911 including loans and borrowings, trade and other payables and bank overdraft.

Turnall reported a loss of $1,8 million in half year to June 2016 from a profit of $400 000 in the same period in 2015.

Questions e-mailed to Turnall on Monday were not responded with Turnall spokesperson, Shame Chibvongodze, saying the company was in a closed period and would take questions from the media when it holds its analyst briefing tomorrow.

“There will be an analyst briefing on Friday. That’s where the announcement of any further details will be done,” he said.

Last year, Turnall sacked managing director, Caleb Musodza and finance director, Kenias Horonga under unclear circumstances with the company saying the duo was leaving as part of “the business’s general cost rationalisation efforts”.

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