“We delisted to pursue a restructuring exercise that will see new investors coming in to inject fresh capital,” he said
CAPS ended a 42-year presence on the bourse, closing Friday's trading session at US0,10c per share and valued at US$3,5 million.
The closing price meant Caps shareholders lost 90% of the share value on a year-to-date basis. But the delisting will give it ample time to restructure.
The firm will merge its manufacturing arm, distribution division – Geddes – and the healthcare unit after which it will inject US$15 million in fresh capital.
Delisting from the ZSE is expected to enable faster decision-making and flexibility for raising capital and restructuring.
Caps had also indicated that the ZSE was trading on the downside due to the global economic meltdown and the negative perceptions about the country.
After quitting the bourse, Caps will revert to being a private entity whose affairs are determined and controlled by private investors outside ZSE jurisdiction.
Fresh capital injection could enable the group to improve profitability after the firm posted a loss in the half year to June 30, 2011.
It could only manage US$8 million revenue and US$2,4 million loss in the half-year period, but retains massive potential to do better if capitalised.
In the half year the manufacturing division was affected by working capital constraints, which held back efforts to raise production to meet demand.
Undercapitalisation also affected the distribution unit, suppressing its revenue potential with monthly turnover stagnating during the half-year period.
As a result, Caps had to seek credit terms to ease working capital constraints. This almost had an immediate impact on the suppressed revenue.
The retail division did well, with revenue steadily increasing in the half year. The product mix was strongly complemented by imported products.
Efforts are currently underway to open new sites to increase the branch network on the strength of the resilience of the QV brand over the years.
Post published in: Business