Pick n Pay has announced the terms of its rights offer to raise R4bn as part of its recapitalisation plan to get the business back to profitability.
The company will offer 252.2-million renounceable rights to subscribe for new Pick n Pay shares in the ratio of 51.11 rights offer shares for every 100 Pick n Pay ordinary shares held for a subscription price of R15.86 per rights offer share.
The rights offer issue price represents a discount of about 32.48% to the theoretical ex-rights price calculated using the closing price on July 10, being R27.39 per share, it said in a statement on Thursday.
The rights offer shares will constitute about 33.8% of Pick n Pay’s post-rights offer share capital.
Pick n Pay has received a firm commitment from its controlling shareholder, Ackerman Investment Holdings, that it will follow its rights up to a maximum of R1bn. Certain other Pick n Pay shareholders have also entered into irrevocable undertakings to subscribe for the shares.
The undertakings of AIH and other Pick n Pay shareholders represent about 45% of the current ordinary shares in issue. the group said.
The rights offer is fully underwritten by Absa Bank, Rand Merchant Bank and Standard Bank.
The net proceeds of the rights offer, combined with that of the proposed Boxer IPO, will be primarily used to settle the group’s outstanding debt and for reinvestment to secure the turnaround of the Pick n Pay supermarket business, the company said in a statement on Wednesday.
The group believes the rights offer, in conjunction with working capital improvements and the Boxer IPO, will assist it in raising sufficient liquidity to reduce long-term debt levels, which will improve liquidity and save on interest costs.
It will also facilitate the delivery of the turnaround strategy of the Pick n Pay supermarket business and unlock shareholder value embedded in the group.
It will also deliver the incremental operational funding needed for the remainder of the 2025 financial year, the group said.
A deterioration in the performance of the core Pick n Pay supermarket business resulted in a substantial trading loss in the Pick n Pay division of R1.5bn in the year ended February, and an overall loss at group level of R3.2bn, including asset impairments.
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