ZIMBABWE’s largest tea producer, Tanganda Tea Company Limited (Tanganda), has revealed financial strain after revealing a US$6,36 million cash deficit and US$7,1 million in bank borrowings, warning that production and debt servicing could face pressure without urgent capital support.
This liquidity squeeze has its roots in the post-pandemic period when disrupted markets, rising input costs and weaker export prices eroded cash flows across its operations, leaving the group with limited financial headroom.
The pressure has since intensified due to climate-related production shocks, power supply constraints and longer agricultural working-capital cycles, which have increased upfront funding requirements while delaying cash inflows from exports.
In response, directors have proposed raising US$8 million through a renounceable rights offer to be voted on at an extraordinary general meeting scheduled for February 18, next month.
The capital raise is aimed at stabilising working capital, supporting core operations and easing balance-sheet pressure as the company navigates a volatile operating environment.
“The COVID-19 pandemic disrupted most businesses globally, and your company was not spared. As a result, the company emerged out of the COVID-19 pandemic era with a cash flow deficit.
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“The deficit has been exacerbated by significant headwinds, namely global climatic phenomena such as El Niño, decline in international crop pricesand the shortage and high cost of power,” Tanganda said in the circular to shareholders.
“The aforementioned have consequently resulted in the company’s cash deficit widening to approximately US$6,36 million currently.
“It is against the foregoing background that the board has seen it necessary for the company to mobilise fresh equity capital, which will enhance the business’ ability to finance its working capital requirements and fund critical capital expenditure.”
The firm continued: “Specifically, the company requires patient capital to enable it to procure packaging materials and inputs for packed tea and water, service debts owed to its key suppliers of fertilisers, chemicals, fuel, pay salaries and wages on time, replace the Tinga Mira water bottling plant, grid-tie the three solar plants, set up a modular macadamia cracking unit and replace Beverage Division distribution trucks.”
Tanganda said failure to meet these financial obligations and to undertake the above capital projects could significantly impair the company’s ability to capitalise on growth opportunities.
“To this end, the directors are proposing to raise US$8 million in foreign currency by way of a rights offer,” Tanganda said.
Under the proposal, Tanganda plans to issue 263 821 324 new ordinary shares through a renounceable rights offer priced at US$0,0303 per share.
This will be done based on one rights offer share for every 0,9896 ordinary shares already held at the record date, payable in US dollars.
“Tanganda’s total bank borrowings were US$7,1 million as of September 2025, with monthly loan obligations (principal plus finance charges) averaging US$335 000.
“Should weather-related challenges continue to impact production, the probability of failing to settle debt obligations will increase,” Tanganda said.
“Failure to meet financial obligations could significantly affect the company’s ability to secure further support from the financial sector in the future.
“The company is implementing a turnaround plan aimed at improving operational efficiency through various cost management strategies.”
Consequently, Tanganda is embarking on the renounceable rights offer.
“In the absence of such funding, the company may be unable to fully execute the planned cost management initiatives, such as increasing the use of ride-on machines for tea leaf plucking,” the firm said.
According to Tanganda, its crop diversification strategy, successfully undertaken in the past 14 years and which is now bearing fruit, has brought with it increased demand for upfront payments from the company’s global value chains.
“The working capital cycle for plantations can extend to as long as 15 months, encompassing flowering and fruit set, harvesting, primary processing, value addition, exporting, and collection from customers.
“If adequate cash cover is not provided for these inputs and operations, scheduled production for the coming seasons will be affected.
“Consequently, the anticipated growth in production volumes may not be realised.”