Jasco Electronics is aiming to raise R57,6-million through a rights offer, to fund the final stage of the group’s three-year turnaround strategy.
The board has announced a rights offer of 72-million ordinary shares at 80 cents per share amounting to R57,6-million.
The group will use the funds to complete the final year of it restructuring programme.
So far, the group has consolidated its five business units and deregistered or sold 13 legal entities, creating a single Jasco brand from numerous disjointed companies.
It has removed several management positions and one management level.
Since 2011, it has grown the order intake from R800-million to R1,2-billion in 2013, while expanding its national and regional footprint to service major customers and also expanding into 11 new product and market segments.
The group has reduced customer dependency, with no customer representing more than 8% or revenue.
Going forward, the last year of the programme will be focussed on the following key areas:
* Improving the funding position as well as reducing the interest burden on the business;
* Exiting low-value manufacturing businesses systematically, which includes the finalisation of the sale of M-TEC and the disposal of non-core business units in, inter alia, the automotive and leisure segments of Jasco Electrical Manufacturers;
* Monitoring non-performing business areas; and
* Improving the quality of earnings generated by Jasco by amongst other things, completing the restructuring programme, consolidating procurement and improving working capital management.
In line with the restructuring programme and the group’s strategic initiative on improving its funding position, the directors of Jasco have proposed the rights offer to help accelerate its organic growth strategies and to strengthen and improve the structure and efficiency of its balance sheet.
The group intends to use the proceeds of the rights offer to reduce its bank account overdraft balances and continue to fund organic growth initiatives and increase the balance sheet flexibility by diversifying and improving funding sources and ensuring additional borrowing capacity.