Zimre Holdings is seeking to raise $15 million through a rights issue to shore up its capitalisation levels and ensure the growth of the business.The rights issue, which is subject to shareholder approval, will see 750 million new ordinary shares being offered for cash at a subscription price of $0,02 each to existing shareholders on a basis of one new ordinary share for every 1,041 ordinary share already held by existing shareholders registered as at January 30, 2015.
The new ordinary shares will have equal ranking to all existing shares with effect from the date of issue. The rights issue will be underwritten by NMB Bank Limited.
The rights issue is expected to enhance liquidity and strengthen the reinsurer’s capital base and subsequently increase underwriting capacity and support business growth.
Zimre holding is also seeking to use the money from the rights issue to reposition its subsidiaries, both local and regional to be competitive in their respective markets.
The capital raising initiative is part of a three pronged initiative being employed by the reinsurer to turnaround its fortunes.
Apart from raising capital, Zimre is undertaking a cost optimisation and investment restructuring exercise.
ZIMRE Holdings subsidiary, Baobab Reinsurance has already indicated that it is retrenching about 50 percent of its staff compliment.
ZHL chief operating officer Mr Solomon Tembo said at least half of the employees targeted for retrenchment have been retrenched, without giving the figures.
“We expect to conclude the exercise by the end of the first quarter of this year and this will result in huge savings,” Mr Tembo said.
The restructuring of its investment portfolio on the other hand is being achieved through the disposal of peripheral, non-core and non-performing investments, in order to introduce liquidity in the core reinsurance operations.
The reinsurer intends to sell off non-core assets to raise about $7 million. In this regard Zimre Holdings has already sold its 49 percent stake in Malawi subsidiary, United General Insurance Company (UGIC), to its associate NicozDiamond for nearly $1,3 million.
In the half year to June the reinsurance division contributed $17,46 million in GPW in the six months to June compared to $19,77 million in the same period last year and an operating loss of $1,54 million compared to an operating profit of $0,31 million achieved in 2013.
ZHL recorded a loss after tax of $0,11 million in the six months to June compared to a profit of $2,39 million in the same period last year.
ZHL has interests in the insurance, reinsurance, life and pensions, property and agro-industrial sectors.
Apart from local operations, ZHL also has investments in Mozambique, Malawi, Zambia, South Africa, Uganda and Botswana.