South African grocery retailer Pick n Pay has said that proceeds from listing its discount grocery chain Boxer could total 8 billion rand (€408 million), according to its preliminary estimate.
Chief executive Sean Summers is tasked with reviving through a turnaround and two-step recapitalisation plan a retail business that has been losing market share to bigger rivals Shoprite and others for more than a decade.
Trading Loss
A deterioration in the performance of the group's core Pick n Pay supermarket business resulted in a substantial trading loss in the Pick n Pay division of 1.5 billion rand (€76.5 million) in its financial year that ended February 25, and an overall loss at group level of 3.2 billion rand (€163.2 million).
At the same time, its net debt escalated.
Rights Issue
In order to lower its debt and strengthen the underlying performance of its Pick n Pay Supermarkets business, the group recently raised 4 billion rand (€204 million) through a rights issue and will now begin the process of listing Boxer towards the end of 2024, subject to shareholder and final board approval.
Details of the number of shares in issue, price, and target amount will be shared closer to the time, but "for illustrative purposes only, the share issue will generate 8 billion rand (€408 million) in proceeds," the retailer said in a statement.
'The Boxer IPO (initial public offering) will also ensure that Boxer is accorded a market value that appropriately reflects its growth trajectory and return on invested capital, thereby unlocking shareholder value embedded in the Group,' Pick n Pay said.
