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SepHold to raise R37.5m through rights offer

22nd January 2020

By: Tasneem Bulbulia

Senior Contributing Editor Online

     

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JSE-listed Sephaku Holdings (SepHold) intends to raise about R37.5-million by way of a partially underwritten, renounceable rights offer.

This decision follows a detailed review of the company’s capital requirements; and an announcement in December 2019 that the company intends to raise about R50-million in equity.

In terms of the rights offer, 46.2-million new ordinary SepHold shares will be offered to shareholders at a rights offer issue price of 81c a share, in the ratio of one rights offer share for every 4.5 SepHold ordinary shares held.

Given the current market and trading conditions, resulting in, besides others, reduced profitability numbers, the board has taken a decision to focus on prudent debt management and decreasing net debt levels by increasing its cash balances.

A decrease in net debt levels is also necessary to ensure the group's continued compliance with debt covenants imposed by the group's lenders.

Accordingly, the proceeds from the rights offer will be used by SepHold to settle the rights offer expenses, with the remaining balance being retained by the company in an interest-bearing cash reserve account.

The increase in cash reserves will effectively reduce the net debt to acceptable levels and, thereby, ensure continued compliance with certain debt covenants pertaining to the company's net debt levels.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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