Shareholders in JSE-listed Gijima have taken up 81.9% of the three million shares the company put up in a rights offer to raise R150 million, with the balance being underwritten.
Gijima's rights offer was placed in a bid to re-capitalise the company, ensure compliance with its funding covenants and finance working capital requirements. Yesterday, it said 2.5 million shares had been subscribed for, while excess shares applied for and allocated came to 0.6%. The underwriters will be allocated 17.5% of the offer.
The rights offer was underwritten by Guma Tech, Guma Support, Guma Investment Holdings, Guma Tech Group and Futuregrowth Asset Management. The Guma Group, founded by Gijima chairman Robert Gumede, agreed to subscribe for 36.5%.
As a result, Gijima will now raise the R150 million, which will be sufficient to cover its working capital requirements for the next year. Acting CEO Eileen Wilton has said Gijima wants to raise the cash to invest in new and fresh technology, as well as skills.
Funding commitments
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.
Gijima says the proceeds will be used to, among other things, re-capitalise the business and to provide a funding injection to subsidiary GijimaAst Finance to make sure the unit complies with its securitisation funding covenants. It will also fund working capital requirements and allow it to redeem a portion of senior debentures.
GijimaAst Finance owes R255 million to Futuregrowth Asset Management and Investec Asset Management. The funders 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.
In 2006, Gijima decided to securitise its book in a bid to replace short-term debt facilities with longer-term secured finance to meet its projected funding requirements for growth over the next few years, says Gijima.
At that stage, it issued debentures to investors in the capital markets, allowing it to secure funding requirements for future years at competitive rates on the strength of its debtors book.
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