SOUTH AFRICA – Fast-food and jewellery chain franchiser Taste Holdings plans to raise R398m (US$28.5m) in a rights issue fully underwritten by its largest shareholder, Riskowitz Value Fund.

The rights offer is at 90c a share, a 20% premium to the 75c that Taste was trading at on Thursday morning. This indicates Riskowitz is willing to buy all the rights-offer shares.

Companies wanting to raise money from existing shareholders usually offer rights-issue shares at a discount to the prevailing price, allotting new shares according to how many shares investors already own.

Thursday’s statement did not say how many new shares Taste intends issuing, nor did it give a ratio of how many rights offer shares existing shareholders would be offered.

The 90c offer price and R398m capital raising targets implies about 442-million rights offer shares, which means Taste’s shares in issue will nearly double from the current 459-million.

Taste said as it would be “issuing more than 30% of its shares in issue at the rights offer record date”, which would take it close to its maximum authorised share capital, it needs shareholders to approve an amendment to its memorandum of incorporation.

Taste originally intended to repay R225m debt and fund the continued roll-out of Starbucks and Domino’s by selling jewellery chains NWJ, Arthur Kaplan and World’s Finest Watches.

In September, it warned shareholders that it had concluded that it was not an opportune time “due to the current prevailing macroeconomic environment and generally tough retail trading conditions”.

BD Live