WILLDALE is seeking shareholder approval to raise $3,2 million in the form of semi-annual redeemable convertible cumulative preference shares through a rights issue.
Victoria Mtomba
In a statement yesterday the company said the company was still recovering from the hyperinflationary environment that characterised the economy between 2004-2008.
The company wanted to channel the funds towards capital expenditure, plant refurbishment, spares and consumables and working capital requirements.
The company said its output has been affected by old plant and unavailability of requisite equipment for clay mining.
“The result has been excessive down-time in Willdale limited’s production operations. The low production volumes have resulted in high average cost of production for the company leading to reduced viability of the company’s brick making operations,” it said.
“Directors are of the view that the new capital injection will provide the company with the ability to improve production volumes, restructure its balance sheet and enjoy economies of scale.”
Willdale said Old Mutual would be the underwriters of the transaction.
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The company is indebted to the tune of $6,65 million as at September 2013.
Over 86% of the debt is short-term, falling within one year and the rest of it is medium-term due after 12 months.
“The maturity profile of the debt has impacted negatively on the liquidity position of the company. The average cost of the company’s borrowings is 10,7%,” the company said. For the full year ended September 2013, the company posted a loss of $770 621 and an operating loss of $401 504.
Turnover for the group stood at $6,8 million.
Willdale has a capacity to produce over 40 million bricks a year, but currently the output stands at around 17,5 million bricks.
