Shareholders holding 70% of Gijima stock have agreed to vote in favour of the company's bid to raise R150 million.
Gijima last month said it would seek to raise R150 million through a rights offer to re-capitalise the company, ensure compliance with its funding covenants and finance working capital requirements. Shareholders are set to meet on 9 May to vote on the proposal.
Acting CEO Eileen Wilton has said Gijima wants to raise the cash to invest in new and fresh technology, as well as skills. In an announcement yesterday, Gijima said shareholders collectively holding 70% of Gijima shares have committed to vote in favour of the offer.
In the six months to December, Gijima made an operating loss from continuing operations of R123 million, partially due to pressure on its top line. The company, which recorded a gain of R33 million in the year-ago period, believes it is positioned for strong growth after a challenging operational period. In the first half of the year, revenue from continuing operations was down 23%.
It ended the period with cash and cash equivalents of R89 million, compared with R200.9 million in the six months to December 2011.
Temporary leniency
Gijima is set to issue three billion shares, at a subscription price of 0.05c per rights offer share, in a ratio of 309.8 rights offer shares for every 100 shares held by Gijima shareholders. Gijima last traded at 7c a share and has 968.4 million shares in issue.
So far, the Guma Group, founded by Gijima chairman Robert Gumede, has agreed to subscribe for a billion shares, or 36.5% of the rights offer. Allan Gray will take up 713 million - or 23.8% - of the rights offer shares, while Investec Asset Management will buy 300 million, or 10%. In total, this will raise R105.3 million.
Guma Group and Futuregrowth Asset Management have also agreed to underwrite the balance of the rights offer.
Gijima subsidiary, GijimaAst Finance, currently owes R255 million to Futuregrowth Asset Management and Investec Asset Management. The funders have agreed to provide temporary leniency to GijimaAst Finance in terms of non-compliance with covenants, which includes minimum asset cover and gearing requirements.
One of the conditions for the leniency is that Gijima must raise sufficient equity capital, and funds made available by Gijima to GijimaAst Finance, to ensure GijimaAst Finance will meet the required minimum asset cover ratio and have sufficient funding reserves to cater for unforeseen risks.
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