DURBAN – Taste Holdings rose more than 7 percent on the JSE after the group announced its R132 million fully underwritten rights offer had received the backing of shareholders.
The company closed 7.69 percent higher at R14 after it said the decision was taken during a general meeting this month.
The group announced its intention to raise R132m from its shareholders by way of a fully underwritten renounceable rights offer of 1.32 billion new ordinary shares to qualifying shareholders in December, saying the subscription price would be 10 cents a share.
It said it planned to use the money for immediate operating cash needs and to fund the next 10 to 12 months of the food division’s operations and expansion plans.
“Taste’s local brands, The Fish & Chips Co and Maxie’s Grill and its luxury good division, Arthur Kaplan Jewellers; World’s Finest Watches and NWJ do not require any additional funding as they are generating sufficient cash from their operations and facilities to fund their expansion plans,” the group said.
Taste said it expected to use between R76m and R83m to fund the anticipated operating losses over the period and at least R40m to open between four and six new Starbucks.
The group also said that an amount of between R5m and R7m would be used to fund maintenance capital expenditure on the existing Domino’s Pizza corporate restaurants and between R4m and R6m to fund the expansion capital expenditure for the group’s shared information technology infrastructure.
Taste estimated that it would require at least R700m, including the amount raised in the current rights offer, to reach positive free cash flow, and that the Starbucks network would need to expand to between 150 and 200 establishments and Domino’s to between 220 and 280 restaurants.
In the six months to end September, Taste reported an operating loss of R87.3m.