HARARE – Construction group Radar Holdings Limited (Radar) says it is divesting from its forestry business Border Timbers Limited (Border) to focus on core business.
Heinrich von Pezold, Radar’s chairperson, said the disposal was necessary given the differing financial needs and focus of the companies.
“This will allow Radar to build on the already positive performance achieved by the company in the construction sector,” Von Pezold said yesterday.
“Radar is actively engaged in discussions with potential new investors,” the chairperson said.
Von Pezold added that as a standalone company, Radar will have the capacity to undertake mergers and acquisitions with entities in the same or complementary spheres of operation and consequently drive shareholder value.
Radar’s shareholders have approved the transaction and the group now awaits authorisation by the Securities Commission of Zimbabwe (Secz), and Zimbabwe Stock Exchange’s (ZSE) listings committee.
Radar and Border are separately listed on the ZSE.
Radar’s 51,24 percent shareholding in Border will cease to exist as the latter’s ordinary shares will be distributed pro rata to the existing shareholders.
The distribution in specie will occur by way of reduction of the company’s distributable reserves whereby Radar shareholders will receive approximately three Border shares for every seven shares held by the former.
In specie distribution is made when cash is not readily available, or allocating the physical asset is the best alternative.
Elias Hwenga, Radar’s managing director, told businessdaily that the group was negotiating with a local financial institution to acquire a working capital loan.
“We hope to get between $4 million and $5 million from a local bank (name supplied) with a fixed asset backed medium-term loan of up to three years. This deal will be concluded early next year,” said Hwenga.
Border recently acquired a five-year loan facility valued at $7 million from the German Development Bank.
Meanwhile, Radar reported a 40 percent slump in after-tax profit to $1,31 million in the year to June 2012.
Group revenue went up 37 percent to $36,25 million during the same period.
Operating expenses, which include labour, electricity and the costs of redeeming the plantations at Border after a fire pulled the group’s operating profit 26 percent down to $5,14 million.
Radar said employment costs increased 24 percent to $11 million while energy charges surged 32 percent to $6 million.
The group said its Bulawayo-based subsidiary MacDonald Bricks now had a dedicated power line, while Mutare-based Border commissioned a biomass electricity project that produces 0,5 megawatts to avert power challenges.
Repairs and maintenance costs stood at $7,7 million. The group is pursuing its equipment replacement programme, which it says will take several years to complete. –