Pick ‘n Pay, one of South Africa’s biggest grocery chains and partially owned by the rich Ackerman family, has announced a $220.3 million fully underwritten, renounceable rights offering to bolster its capital basis.
The move is part of a series of strategic actions aimed at stabilizing the company’s finances in the face of operating difficulties.
The R4-billion ($220.3 million) rights offer, approved by shareholders on June 26, 2024, is fully underwritten by Absa Bank, Rand Merchant Bank, and Standard Bank of South Africa. It aims to solve Pick ‘n Pay’s deteriorating debt and recent losses.
The rights issue, which will provide fresh shares to current shareholders, will begin on July 19. The proceeds will be utilized to decrease debt, lower interest expenses, and help the core company recover in FY2025. The upcoming IPO of discount retail chain Boxer is likely to strengthen Pick ‘n Pay’s financial condition.
Pick ‘n Pay, headquartered in Cape Town, South Africa, runs over 2,000 outlets in eight African nations. The Ackerman family owns 25.53 percent (124,677,238 shares) in the South African retailer.
Pick ‘n Pay’s primary supermarket operation lost R1.5 billion ($82.93 million) in trading for the fiscal year ended February 25, 2024, adding to a total group loss of more than R3.2 billion ($176.95 million). Rising debt levels emphasized the necessity for quick action. Sean Summers’ appointment as CEO is part of Pick ‘n Pay’s restructuring initiatives.
Pick ‘n Pay’s rights issue is reflective of the company’s recent struggles. The $220.3 million IPO is a significant step toward stabilizing its finances and revitalizing its retail operation.
As Pick ‘n Pay navigates these issues, shareholder backing and strategic leadership from CEO Sean Summers will be critical in returning the firm to a path of long-term growth and profitability.
