TFG plans to raise R3.95bn through a rights offer
JOHANNESBURG - Retailer TFG said on Thursday it planned to raise R3.95 billion through a rights offer to lower debt and protect its balance sheet, as profits fell 1.1 percent in the year to March 31.
TFG, which also operates in Australia and the UK, said the proposed rights offer was fully underwritten by a syndicate of banks comprising three of its largest lenders, and its major shareholders have shown support.
“The intention, really, is to put us in a position to insulate the balance sheet against any shocks,” TFG group chief executive Anthony Thunström said at the firm’s results presentation.
He also announced the company would axe its dividend to shareholders this year. As a result of an uncertain economic outlook, several South African companies have either slashed, postponed or axed dividends.
“There is a lot of uncertainty going forward. We’re confident that the sizing of this capital raise covers us for pretty much anything that is foreseeable in our scenario planning,” Thunström said.
The proceeds from the rights issue would also be used to invest in the business, with particular focus areas being e-commerce and the firm’s local manufacturing “vertical integration”, Thunström said, adding that the money might also be used for any attractive acquisitions.
He quashed speculation that the clothing and homeware retailer was interested in rival Edcon, which was in bankruptcy protection and was up for sale.
“We have no interest in any of those businesses. They don’t fit strategically with us,” he said. Its headline earnings per share stood at 1 174.4 cents per share during the period, versus a restated figure of 1 187.9c a year earlier.