Willdale shareholders approve $3,25m capital raise

Published: 06 May 2014

Listed bricks manufacturer Willdale Limited's shareholders unanimously approved a capital raising initiative of $3,25 million through a rights issue of preference shares at an EGM this morning.

The shares are being offered for cash at a subscription price of $1 each payable on the basis of one 10 percent semi-annual redeemable convertible cumulative preference share for every 546.24 ordinary shares held.

The funds will be used to boost the firm's capacities through providing working capital, while part of it ($1,5 million) will go towards servicing a bridging loan that the company acquired from CBZ to purchase critical mobile equipment. Willdale expects that the transaction will help boost the plant's capacity to 10 million bricks per month from the current level of 6 million bricks per month, which will result in capacity utilisation of 70 percent.

Willdale is also looking at plant rehabilitation and investing in mobile equipment which would lead to a 50 percent labour reduction from 500 to 250. According to Willdale's consultant CEO Clifford Mushambadzi, the plant is currently operating at 30 percent. The new capital will also reduce production downtime and maximise production throughput, helping to meet local demand.

Giving an over view of the company's performance for the first six months of the current financial year, Mushambadzi said the first six months - which include four months of wet weather - have witnessed the same production levels as in the prior year, in line with a deliberate strategic decision to reduce green production in the wet season to minimise brick losses. Management is planning to improve uptime to 80 percent in the second half due to the on-going re-capitalisation efforts, up from 56 percent in the previous year.

Mushambadzi said the company had made significant progress in structuring its short-term loans and overdraft facilities to a medium term loan.

He added: "The bridging loan of $1,5 million has improved the company's operational base....the proposed rights issue of $3,25 million will provide a turning point for the company's funding requirements. "This will provide Willdale with funding for its capex and working capital requirements. This should push production to the higher volumes required by the market."

Meanwhile, Willdale's 54th AGM, which was held earlier saw the company's shareholders adopting the audited financial statements for the just ended financial year; re-election of the company's directors; approval of directors' fees of $92 228, and the re-election of Ernst&Young as auditors for the ensuing year.
- BH24

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