Art seeks $3,5 million

HARARE - Zimbabwe Stock Exchange-listed group Art Corporation (Art) is seeking nearly $3,5 million for recapitalisation.

The diversified concern is currently raising funding for capital expenditure in order to improve manufacturing efficiency in its factories and improve its product quality, which would also reduce product manufacturing costs.

Franklin Mukarakate, the group’s company secretary, said the move would  increase the company’s debt to equity ratio.

“Some of the capital equipment has been ordered and is expected to be installed on arrival in September 2014,” he said, adding that the board was seeking shareholders’ approval to accommodate any anticipated increase in borrowings.

Mukarakate noted that the group would this month hold an extra-ordinary general meeting to seek shareholder approval to “double the amount of the issued and paid up share capital for the time being in the company” so as to increase the group’s borrowing limit to twice the equity cover.

Art’s issued capital is currently at 431 477 359 shares and yesterday, each share was trading at $0,40, amounting to a total $1 725 909. This means the company seeks to borrow approximately $3,45 million.

This comes as the group recorded a $1,16 million loss in the half year period ended March 31, 2014 from a profit of $236 000 a year earlier after its business units achieved lower volumes due to liquidity challenges in the economy.

As a result the group’s margins fell to 31 percent from 34 percent a year earlier while revenue was 7,5 percent lower at $14,09 million. Only the stationery unit achieved positive volumes.

“The persistent liquidity constraints in the economy as well as competition from imports significantly constrained the business’ ability to generate revenues to planned levels,” said the group’s chairman Passmore Matupire.

In the outlook period Matupire said Art expects to commission $1,8 million worth of equipment, which is meant to improve efficiencies and increasing capacity by year end.

The equipment is aimed at ramping up production at Eversharp, the Kadoma and Battery factories.

“In addition to the capital expenditure facility, it is expected that the business will utilise $2 million of shareholder working capital funding which will reduce the current working capital constraints faced by the business,” he added.

Art is the holding company of a manufacturing group of businesses in Zimbabwe with distribution operations in Malawi, Zambia, Zimbabwe and South Africa.

The group has established trade links with Mozambique, Namibia and Botswana, and is making in-roads in Angola, the Democratic Republic of Congo and Kenya.Art seeks $3,5 million

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