Almot Maqolo.
Harare, Zimbabwe (News of the South) – Listed brick manufacturer, Willdale Limited plans to significantly reduce the debt burden for the Company, position it to grow and fully exploit emerging opportunities in the market by selling its 190.1 hectares of undeveloped land in Mt Hampden at $4.75 million.
The Company’s performance since the dollarization of the economy in 2009 has been adversely affected by inadequate capitalization that resulted in low production volumes, high cost of production and loss of business to emerging competition.
The group successfully raised $3.225.000 million through a renounceable rights offer of redeemable, cumulative 10 percent preference shares in 2014.
It claims that the amount raised was primarily used to replace and refurbish plant and machinery resulting in production capacity increasing from 6 million bricks per month to 10 million bricks per
month.
However, the recent liquidity challenges facing the economy resulted in a downturn in construction industry with capacity utilization declining from 70 percent in 2015 to 55 percent in 2016.
Willdale currently owns over 514 hectares of land near its factory in Mount Hampden, in the outskirts of Harare along Lomagundi Road.
The land was primarily acquired for its clay content which is used for manufacturing bricks.
According to the company circular, the part of the land which the Company intends to dispose does not contain the requisite clay soils suitable for brick manufacturing.
“The Company has been approached by and commenced discussions and negotiations with developers and housing cooperatives wishing to acquire the land for housing development.
“The Company then engaged an independent valuator, Property World, who indicated an approximate value of $4.75 million for the land, discussions with potential developers and housing cooperatives who have expressed an interest in purchasing the land have indicated that a figure higher than the indicated value can be attained,” Willdale said.
In the circular, the group said, “The proceeds from the disposal will then go towards expunging the company’s interest bearing debt, overdue preference share dividends, partial redemption of the preference shares as well as meet working capital requirements.”
Disposal of the asset is poised to reduce the carrying amount of the land on the balance sheet of the company by $2.832.490 million whilst reducing debt and or increasing cash balances by at least $4.752.500 million.
Willdale expects to realize a profit of $2.832.490 million from sale of the land.
Total assets for the company slightly declined from $27.7 million to $27.6 million as of the last financial period which ended September 2016.
The recent announcement by the Government of its intended move to relocate the administrative capital city and Parliament to Mount Hampden, has ignited demand for residential land in the area.
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