Pick n Pay expects to separately list the Boxer budget chain before the end of this year after it successfully raised R4 billion under an oversubscribed rights offer that closed last week, while the debt-laden retailer has also established new operational structures.
The Pick n Pay rights offer closed on Friday and results show that 248.9 million rights offer shares were subscribed for while an excess of 270.4 million rights offer shares were received, representing an oversubscription rate of more than 100%. Only about 3.2 million of the 270.4 million in excess rights offer applications were allocated.
Although it had set a target of R4bn for the rights offer, it received subscription applications worth about R8bn.
The rights offer was undertaken at a subscription price of R15.86 per rights offer share.
The scheme was fully underwritten by South African banks including Absa, Rand Merchant Bank, and Standard Bank of South Africa.
Pick n Pay CEO Sean Summers said “the successful conclusion of the rights offer demonstrates the market’s strong confidence” in the company’s turnaround strategy.
“It marks a crucial first step in our recapitalisation plan, positioning the group well to fund long-term sustainable growth,” he said.
Summers added that after concluding the rights offer, Pick n Pay was now intensifying its focus on the “core Pick n Pay retail business”, which has however been struggling for profitability in the past few years.
In the year to end February, 2024 Pick n Pay’s supermarket business tipped into a substantial trading loss of R1.5bn.
The Pick n Pay CEO was last month awarded performance-based shares worth R108 million for him to turn the company around. The retailer’s remuneration committee issued the shares to Summers at nil cost, saying they may vest – subject to performance conditions being met – over a period of 32 months.
Pick n Pay had already established new leadership and operational structures for the retail business which it has “strengthened with seasoned” executives. Next up is the Boxer unbundling and IPO that is expected to be completed before the end of this year.
“With the successful completion of the rights offer, the group has now completed the first step to recapitalise the business. Step two is Boxer’s IPO, which is progressing well and is on track for a JSE-listing towards the end of the year,” the company said yesterday.
Pick n Pay was also geared to drive growth in the budget retail chain, Boxer, as well as in its clothing business segment.
Shares in Pick n Pay traded 4.60% weaker in afternoon trade on the JSE yesterday at around R21.55 while it is 15.9% lower in the past 30 days.
Directors at the company also followed their rights to the shares on offer. These include non-executive chairman Gareth Ackerman who subscribed for R14.7m, Suzzane Ackerman who snapped up R5.7m and Jonathan Ackerman who subscribed for rights worth R8.2m.
The three also subscribed for a further R1bn worth of shares under Ackerman Investment Holdings Limited, which is controlled by the Ackerman family that controlled Pick n Pay. Summers was also among the company’s directors that participated in the rights offer after subscribing for a total of R20m in shares.
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