PG postpone meeting to restructure liabilities

Published: 24 January 2014

At the scheme meeting held today, Friday 24 January 2014, a decision was made to postpone the Scheme of Arrangement to restructure the Company's liabilities to banks and other creditors.

The Scheme of Arrangement meeting was meant to align with the Zimbabwe Sock Exchange listing requirements.

The group was expected to have a Scheme of Arrangement with its lenders, creditors and debenture holders as well as pursue a $3,5 million rights offer.

Funds from the rights offer will be used to strengthen its working capital position by purchasing additional stock. The company's stock mix is currently sub-optimal and characterised by a number of slow moving lines. The funds will be used to reconstitute this stock mix in a bid to enhance stock turnover.

The company's balance sheet as at September 30, 2013 is made up of $5,3 million worth of expensive bank loans; $18,7 million worth of creditors; $5,9 million worth of debentures and a negative equity position of $3,3 million. It is feared that the group's going concern status is severely at risk.

PG has since dollarisation been suffering under huge working capital challenges. In a bid to try and boost its working capital position, PG has had to rely on short term expensive debt to fund operations. This has resulted in decreased sales and consequently persistent losses.

Under the proposed recapitalisation initiatives PG will have a secured lenders scheme offering selected properties as settlements for the $5,3 million owed to them.

The weighted average discount on the disposal of the properties that are being swapped for debt is 16,1 percent of the their current book value translating to an aggregate loss on disposal of us$754 375.

On the proposed creditors' scheme, only one creditor, Sherwood International's Zimbabwe unit Super Group Trading is secured. PG owes $1,4 million to Sherwood which is secured by a guarantee from a local financial institution. Under the proposal, Sherwood will continue to supply the group.

The remaining creditors, owed about $16,3 million will be offered either PG ordinary shares in lieu of amounts owed at a price of $0,001 by way of private placement or a deferred payment plan to settle the amounts over a 36-month period plan.

The scheme will also seek to have debenture holders convert their debentures to PG ordinary shares. The debentures are worth $6,72 million.

It was highlighted that the financial results are being collated and they need to be included in the scheme circular to creditors and shareholders thus a date of 14 March 2014 was requested and subsequently granted to Old Mutual Limited the agitated shareholder.
- businessdaily - herald

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