CLOTHING retail chain, Edgars Stores Limited, said yesterday it will soon issue a rights offer to mobilise capital to fund expansion projects.
A rights offer allows existing shareholders to buy more shares in the company at a discount in proportion to their existing shareholding. The group, which has four main subsidiaries — Edgars, Jet, Edgars Financial Services and its clothing manufacturing unit, Carousel, will become one of the few Zimbabwe Stock Exchange listed companies to hold a rights issue in the past few years.
Company secretary, Mr Vuyo Nxumalo said in a cautionary statement that the company was “involved in discussions of a potential transaction that may have a material impact on the value of the company’s shares.”
On Monday, Edgars shares were trading at 48 cents on the ZSE.
“The transaction involves raising capital for the company’s expansion initiatives through the issuance of shares by way of a rights offer,” he said.
The group did not, however, reveal the amount that it intends to raise.
Edgars has recently been on an expansion drive, having opened new stores in Banket, Chegutu and Kadoma. Like any other retailer, the firm is also struggling with inflationary pressures that have eroded consumer disposable incomes.
In an earlier update, Edgars group managing director, Linda Masterson said the chain was in need of funding for a variety of programmes, including capital projects, working capital and for the micro-finance unit.
Late last year, a Mauritian investment management firm, SSCG Africa Holdings, concluded a transaction to acquire 41,07 percent of Edcon shares from clothing retailer, Edgars Limited. SSCG Africa Holdings, which also has interests in local micro-finance Untu Capital, was given the go ahead by the Competition and Tariff Commission to acquire a 41,07 percent stake in the Zimbabwe Stock Exchange (ZSE)-listed concern, which was previously held by Edcon, a South African headquartered group. — New Ziana/Business Reporter