All eyes on Tanganda shareholders

SAMANTHA MADE

Tanganda Tea Company Limited, a publicly traded tea producer, has set its sights on securing shareholder approval for a planned US$8m capital raise, Business Times can report.

Company secretary Sharon Kodzanai confirmed that preparations for an Extraordinary General Meeting (EGM), expected to be convened in the coming weeks, are at an advanced stage.

“The company is currently finalizing the preparation of a circular to shareholders incorporating a notice to convene an Extraordinary General Meeting (EGM) of members for the purpose of considering and approving the capital raise,” Kodzanai said.

She added that the transaction, if successful, may have a material effect on the company’s share price.

The move underscores Tanganda’s determination to shore up its balance sheet and unlock new capital for growth.

But all eyes will now be on shareholders, whose approval is the linchpin of the strategy.

Unlike debt financing, which carries the burden of interest obligations, the initiative depends on investors’ willingness to inject fresh equity into the business.

The company intends to raise the US$8m through a renounceable rights offer, a fundraising mechanism that gives existing shareholders the right to purchase additional shares in proportion to their current holdings.

These rights are “renounceable,” meaning investors who choose not to participate can sell their entitlement to others on the market.

This approach is often favoured in emerging markets because it taps into an already committed pool of investors, minimizes dilution of ownership, and provides flexibility to those unwilling or unable to contribute fresh capital.

In Tanganda’s case, it allows the company to strengthen its financial base while retaining existing shareholder influence.

To accommodate this structure, Tanganda will create a new share class designed to safeguard shareholder interests while enabling the capital raise.

Recently, Tanganda indicated that part of the proceeds from the capital raise would fund a planned migration from the Zimbabwe Stock Exchange (ZSE) to the Victoria Falls Stock Exchange (VFEX), where trading is conducted in US dollars.

That plan has since been shelved, with the company choosing instead to prioritize balance sheet consolidation before considering a secondary listing.

Analysts say the decision reflects pragmatic recalibration.

“The company has recognized that in the current environment, strengthening capital is more urgent than pursuing a new listing,” one market observer noted.

The capital raise comes amid a challenging economic backdrop. Zimbabwe continues to grapple with currency volatility, high inflation, and restricted access to foreign capital.

For Tanganda, an export-driven business in tea, coffee, and macadamia production, these headwinds are compounded by rising input costs and ongoing working capital needs.

By raising equity, the company hopes to place itself on a firmer financial footing. Industry experts point out that while US$8m may appear modest by global standards, for a Zimbabwean agribusiness it represents a meaningful injection of liquidity.

At its core, a rights issue is an invitation for shareholders to reinvest.

Existing investors can take up their rights and buy more shares, usually at a discount to the prevailing market price, or sell those rights to another investor.

For shareholders, the benefit lies in maintaining ownership percentage and potentially benefiting from long-term growth, though it requires committing new cash.

For the company, it provides critical capital without adding debt in a high-interest environment.

Despite the advantages, shareholder approval is not guaranteed. Some investors may be hesitant to inject more money into Zimbabwe’s volatile economy. Others, however, may view this as an opportunity to deepen their stake in one of the country’s most iconic agribusinesses.

Kodzanai acknowledged the delicate balance: “The EGM will provide a transparent forum for debate and decision-making.”

The outcome will serve as a barometer of investor confidence in Tanganda’s prospects.

Founded decades ago, Tanganda has evolved into one of Zimbabwe’s most recognized brands, exporting tea and macadamia nuts while supporting local supply chains.

It remains both a major employer and a vital foreign currency earner.

The implications of the rights issue, therefore, extend beyond the company itself.

A successful capital raise would send a powerful signal of resilience, showing that shareholder-backed funding is possible even in turbulent economic times.

The upcoming shareholder circular will outline the full details of the rights offer, including pricing, timelines, and the structure of the new Class A ordinary shares.

What is certain is that the EGM will be pivotal.

Tanganda has made it clear that shareholder approval is not a formality but the cornerstone of its US$8m fundraising plan.

The coming weeks will therefore determine whether the tea producer can secure the investor backing it needs to chart its next phase of growth.