PG faces collapse as losses widen

HARARE - Distressed PG Industries (PG)’s losses widened to $11,3 million in the year to December 2013 from $7,9 million incurred prior year, casting doubt on the group’s going concern status.

During the period, the building materials manufacturer and distributor’s current liabilities exceeded current assets by $15,3 million compared to $6,8 million in 2012.

Revenue slumped to $33,3 million from $33,6 million while retrenchment costs ballooned to $6,4 million from $4,9 million.

Basic loss per share increased to 2,37 cents from 1,66 cents.

The firm’s merchandising division’s gross sales declined by 8,5 percent to $20,8 million.

“The group continues to face working capital constrains. As at December 31, 2013 the group had a negative equity position of $10 050 443,” acting group chairman Francis Dzanya said.

He said the “conditions gave rise to a material uncertainty that may cast significant doubt on the group’s ability to continue as a going concern”.

PG has been trading in the red since adoption of the multi-currency system —  dominated by the US dollar — in 2009, and has had to rely on short-term borrowings to fund operations. Going forward, the group has entered into a scheme of arrangement with creditors.

“The scheme of arrangement was approved by shareholders and now awaits the approval by the High Court of Zimbabwe,” Dzanya said.

Under the scheme, balances owed as at September 30, will be paid over a 30-month period, after an initial grace period of six months from the date of registration with the High Court.

“This scheme… will provide the much-needed cash flows relief to the group. The group’s secured creditor Sherwood International, agreed to the continuation of the based on current terms,” he said.

He said debenture holders also agreed to convert their $6,7 million debentures into equity.

The conversion will result in annual interest savings of $672 000.

The debentures were due for payment in December 2015.

“Secured lenders agreed to new tier sheets which will result in the elimination of $3, 5 short term loans in property-debt swap deals,” Dzanya said, adding that “this will also result in the restructuring of the remaining short term borrowings to term facilities with an all-in rate of 12 percent per annum over 36 months repayment period.”

To support balance sheet restructuring initiatives, the group has proposed to raise an additional $3,5 million through facilities with local institutions, with $1,1 million already secured.

The group, which by September 30 last year owed $16,3 million, has embarked on an extensive operational restructuring resulting in the merger of its PG Building Supplies subsidiary with PG Timbers.



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