Tapiwanashe Mangwrio Senior Business Reporter
Zimbabwe Stock Exchange (ZSE) listed construction products manufacturer Turnall Holdings intends to float a rights issue to raise an undisclosed amount of funding to expand capacity.
The company revealed the plans in a statement to shareholders saying “The directors of Turnall Holdings Limited (the Company) wish to advise all shareholders and the investing public, that the company is engaged in discussions that involve a potential transaction that may have a material impact on the company’s shares.
“The transaction involves raising capital for the company’s major capital expenditure programme through the issuance of shares by way of a rights offer.
“Further details of the transaction will be availed once the discussions have been finalised. Shareholders and members of the investing public are therefore advised to exercise caution and consult their professional advisors when trading in the company’s shares until finalisation of the aforementioned matter.”
A rights offering is a notification by a company to its shareholders, giving them the right to buy more shares in order for a company to raise funding. The amount of additional shares that each shareholder is able to purchase is in proportion to their existing share holdings.
This comes after the company in its 2022 full year results said it will pursue avenues to increase its manufacturing capacity through capital projects throughout 2023.
Turnall spent $622,5 million in 2022 on capital expenditure programmes, compared to $60,2 million the previous year. The firm said this was mainly aimed at improving production efficiencies.
Grenville Hampshire, Turnall’s board chairman, in a statement accompanying results said, “Despite the challenging business environment, the group has embarked on a major capital expenditure programme aimed at restoring fibre cement production in Harare and introducing production of glass reinforced plastic (GRP) pipes in order to take advantage of this fast growing local and regional market.”
According to the chairman, production of inverted box rib (IBR) sheeting is to be expanded and the roof tile line will also be refurbished. The company is currently making significant investment to its Bulawayo plant aimed at the production of New Tech Fibre cement sheeting mainly for the export market.
“The completely new sheeting line for Harare will utilise the latest technology with the aim of improving production efficiencies and reducing costs,” said Mr Hampshire.
The company said although payments for these projects will largely be made in 2023, the main production lines are expected to become operational in 2024.
Mr Hampshire said, “The board and management are confident that these investments will deliver substantial benefits including increased revenue and profitability, an increase in exports and a sustainable improvement in quality and production efficiency.”
An AC plant with a value of $798,9 million was impaired during the year and will be replaced by the latest state of the art plant which will be commissioned in Harare in 2024 as part of the company’s recapitalisation programme.
The company had no borrowings during the period under review and all capital requirements were funded from internally generated resources.
Turnall operates in a number of segments, building products which includes ceiling boards and roofing sheets, partitioning and fascia boards, flat sheets and ceiling molds; piping products which includes water and sewer reticulation pipes, and concrete products, which includes roof tiles. Also produced by Turnall is a line extension range that includes Turnallware flowerpots and garden décor products, Nutech non-asbestos sheets and Spanish pavers.
Fibre cement division targets the low-income housing sector, local authorities and municipalities through two divisions, Turnall Building Products and Turnall Piping Products. The group has distribution outlets in Zimbabwe, South Africa, Mozambique, Zambia and Malawi.