The board of Pick n Pay announced that it has unanimously approved a capital raise to stabilise the Group’s balance sheet, strengthen liquidity, unlock shareholder value and set a platform for long-term sustainable growth.
The retailer said that the proposed two-step equity capital raise is expected to comprise a rights offer to existing shareholders to provide near-term liquidity around mid-year, followed by an offering and listing of shares in the Group’s Boxer business (IPO) towards the end of 2024.
The Group intends to retain a majority stake in Boxer post the IPO and will seek to raise up to R4-billion through the Rights Issue.
“The terms of the capital raise are still being finalised and are subject to final board approval as well as the requisite shareholder and regulatory approvals. Shareholders are advised to exercise caution when dealing in their Pick n Pay shares until a further announcement is made. The Ackerman family has given their in-principle support for the two-step capital raise,” Pick n Pay said on Thursday.
The Group further said that it will release the detailed terms of the planned capital raise after the announcement of the Group’s full year results in May.
Pick n Pay CEO Sean Summers said that by reducing debt, the proposed capital raise would allow the Group to start putting focus into the core Pick n Pay retail business.
Pick n Pay reported a disappointing trade performance from its Pick n Pay supermarkets business in a trading update released today, with sales down -0.1% for the 47 weeks ended 21 January 2024. This, together with increased inventory levels and strategic investment into Boxer, Pick n Pay Clothing and asap!, has led to a marked increase in net debt, from R3.8 billion at the end of H1 FY24 to R7.2 billion at 21 January 2024.
The Group’s net debt position improved in February 2024, largely as a result of the receipt of R0.5 billion of cash proceeds from the sale of property, and good progress was noted in reducing inventory levels over recent weeks, with the cash benefits thereof expected to flow after year-end.
“Our balance sheet needs to be restructured and stabilised,” said Summers. “This is the appropriate action, at the right time, to help our turnaround strategy. We have totally reorganised our leadership team and strengthened and simplified our operational structure to drive rapid decision making, focusing on better in-store execution and excellent customer service,” said Summers.
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