Willdale to invest $10 mln in new technology after shareholders approve land sale
HARARE – Brick manufacturer, Willdale Limited has been granted the green light by shareholders to go ahead with the disposal of 190.1 hectares of land that is currently not suitable for mining. The company expects to raise a minimum of $4.75m from the disposal.
Proceeds from the sale will be channelled to clean the company’s balance sheet through settling of the company’s interest bearing obligations, in order to increase the company’s chances of attracting new loans for recapitalisation.
The land forms part of Swanwick of Teneriffe of Kinavarra in Mount Hampden, adjacent to the land currently being utilized by the company in extracting the clay used in brick manufacturing.
The offer price, at $2.50 per square meter but the company expects to get better offers. Already three institutional bidders have expressed interest.
The company’s obligations relate to a $2.68 mln interest bearing bank loan and overdraft owed to CBZ Bank Limited. The loan has been accruing interest of 10% per annum. The other obligation is the $863,283 accumulated but unpaid Preference Share dividend. The dividend has been accumulating since 2014 when the preference shares were issued but the company did not have capacity to meet the semi-annual preference dividend obligations.
Priority three of the obligations is a $3.25 mln redemption of Preference shares. The company issued 10% redeemable cumulative Preference Shares in 2014 through a rights issue to shareholders. The shares are redeemable from this year to year five and subject to agreement with the holders of the preference shares. The company intends to redeem them in a phased manner in order to reduce fixed obligations on the company.
In an interview after the extra-ordinary general meeting, chief executive officer Nyasha Matonda told FinX that after settling the obligations, the company will have a clean balance sheet. It has plans to invest between $10 mln and $12 mln on new manufacturing technology to enhance efficiency and productivity.
“Our future plan is to upgrade the current manufacturing technology. From our initial findings (from equipment suppliers), we are looking at investments of up to $12 mln but this will depend heavily on the source where we will procure from”
Matonda said the new technologies of manufacturing will also heavily depend on the market because at current rates, it may not justify the investment.
“It is our hope that the property and housing sector continues to evolve as is happening now, with various government supported housing projects coming up and the National Building Society’s housing projects being rolled out”
Willdale currently owns over 514 hectares of idle land near its factory in Mount Hampden.
In terms of operations, Matonda said the company has to date produced about 10 mln bricks.
“This is only one month’s production since we started late due to the prolonged rain season. We are however looking at increasing capacity as we move into the peak season. As a result there will be minimal impact on our full year production target,” he said. The company’s plants have capacity to produce between 10 to 12 mln bricks per month. Currently common bricks account for 80% of total volume production while face bricks account for the remaining 20%.