Gijima to raise R100m to underpin next stage of turnaround
Information and communication technology services group Gijima on Tuesday announced that it would undertake a rights offer and restructure its existing trade receivables securitisation funding programme to ensure that it had sufficient working capital to underpin the next stage of its turnaround strategy.
Gijima said that it would raise R100-million by offering one-billion shares at a subscription price of 10c a share in the ratio of 503.9867 rights offer shares for every 100 shares held at the close of business on the record date for the rights offer.
The company pointed out that this offer, which had been widely supported, was expected to be concluded within the current financial year.
Meanwhile, in terms of the securitisation funding programme, Gijima and the Guma entities, which collectively held 46.7% of Gijima’s shares, had signed a heads of agreement with majority funder Futuregrowth Asset Management. This included the deferral of capital repayments by two years and the restructuring of the securitisation covenants, in line with the agreed turnaround strategy.
This heads of agreement was, however, subject to Gijima raising the R100-million through the rights offer, as well as Yebo Guma providing an immediate interim bridge loan to Gijima of R30-million.
Yebo Guma would make this loan available as of September 30.
Further, Gijima stated that it was comfortable that the implementation of its turnaround strategy, to date, was showing satisfactory progress despite tough trading conditions and despite the year’s lossmaking position.
During the year ended June 30, Gijima made a loss of R152.36-million, showing an improvement from the R210.76-million loss during the prior financial year.
As a result of the turnaround strategy Gijima had also achieved its target cost reduction of R200-million during the financial year, while also having stabilised its customer base.
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