Shareholders in financially troubled technology services company Gijima have given the green light to its proposed rights offer, in which it’s raising R150m “to ensure compliance with all its funding covenants” and to finance its working capital requirements.
Gijima announced the rights offer at the end of March after posting a loss of R106m from continuing operations for the six months ended 31 December 2012, from a loss of R69,6m a year earlier.
The rights offer is being done at 5c/share, a fraction of the 18c the share was trading at before the announcement. Gijima closed flat, at 7c/share, on Thursday.
Sufficient institutional investors had already agreed to support the rights offer, meaning its passage was unlikely to be blocked at Thursday’s general meeting of shareholders.
Special resolutions to amend Gijima’s memorandum of incorporation and to increase the number of authorised shares in issue will now be lodged with the Companies and Intellectual Property Commission.
Gijima said in March that its GijimaAst Finance business owed Futuregrowth Asset Management and Investec Asset Management R255m. Both companies had agreed to provide “temporary leniency in respect of noncompliance by GijimaAst Finance with such covenants”.
“One of the conditions for which such leniency is to be granted is that sufficient equity capital must be raised by Gijima, and funds made available by Gijima to GijimaAst Finance, to ensure that GijimaAst Finance will meet the required minimum asset cover ratio and have sufficient funding reserves to cater for unforeseen risks.”
Gijima intends offering 3bn shares under the rights issue in a ratio of about 310 rights-offer shares for every 100 shares held by Gijima shareholders. It said in March that the offer was expected to be concluded in the current financial year.
Just over 70% of shareholders had agreed to support the rights offer.
Gijima interim CEO Eileen Wilton told TechCentral last month she was confident a turnaround plan she’s leading would mean that the money raised through the rights offer would be sufficient to see the company through to better times. — (c) 2013 NewsCentral Media
