All eyes on Tanganda shareholders

CLOUDINE MATOLA

Publicly traded tea producer Tanganda Tea Company Limited’s shareholders are set to determine the company’s future in two weeks’ time when they convene in Harare to vote on a proposed rights offer, Business Times can report.

The renounceable rights offer is conditional on shareholder approval, Zimbabwe Stock Exchange (ZSE) consent for the listing of the new shares, the underwriting agreement becoming unconditional, and the fulfilment of other regulatory requirements.

A renounceable rights offer allows existing shareholders to either take up additional shares in proportion to their current holdings or sell those rights to other investors. The approach enables companies to raise fresh capital without excessive dilution, while giving current investors the first option to maintain control.

For Tanganda, the capital raise is viewed as a potential lifeline, aimed at stabilising operations and positioning the company for long-term growth. The move underscores management’s determination to shore up the balance sheet and unlock new funding.

However, shareholder approval remains the linchpin of the strategy.

“The rights offer is subject to fulfilment of (several) conditions precedent, including the approval by the members of Tanganda of the requisite resolutions at the EGM to be held on Wednesday, 18 February 2026, approval by the ZSE of the listing of the new Tanganda ordinary shares to be issued pursuant to the rights offer and obtaining all such other necessary regulatory approvals as may be required,” Tanganda said.

If approved, the new shares will rank pari passu (equal footing) with existing ordinary shares. The allotment process and commencement of trading on the ZSE are expected to follow shortly after the EGM.

If the deal is approved by the shareholders, the rights offer is scheduled to open on February 24, 2026, and close on March 17, 2026.

Should the offer fail to achieve full subscription, the underwriter, Rutanhi Beverages, a subsidiary of cash-rich diversified conglomerate Innscor Africa Limited, will be required to take up the shortfall.

Significantly, if Rutanhi secures 35% of Tanganda’s total issued shares, it would gain the power to buy out minority shareholders, effectively paving the way for Innscor to take control of the tea producer.

Innscor is already positioned to secure a substantial equity stake in Tanganda following its appointment as underwriter to the critical US$8m rights offer.

The capital raise seeks to address a working capital deficit that dates back to the Covid-19 period and could trigger a major shift in the ownership structure of the ZSE-listed company if minority shareholders do not take up their rights.

Crucially, Rutanhi has indicated its intention to extend an “irrevocable offer” to Tanganda’s minority shareholders in the future, provided the current transaction does not trigger a mandatory offer under the Companies and Other Business Entities (COBE) Act and the ZSE Listings Requirements.

Tanganda, is currently grappling with a US$6.36m working capital deficit. Management has warned that failure to implement the rights offer could see the company miss critical growth opportunities and fall short of meeting global value chain demands.

The move by Rutanhi Beverages highlights the broader strategic expansion of its parent company, Innscor Africa Limited.

Listed on the Victoria Falls Stock Exchange (VFEX), Innscor has steadily consolidated its beverages portfolio under Rutanhi, which already houses brands such as Prodairy and Probottlers.

Tanganda is seeking shareholder approval to raise US$8m after its cash deficit widened to approximately US$6.36m. The funds will be used to service debts to key suppliers, ensure timely payment of salaries and wages, replace the Tingamira water bottling plant, and finance other critical capital expenditures.

“The Covid-19 pandemic disrupted most businesses globally and your company was not spared. As a result, the company emerged from the Covid-19 pandemic era with a cash flow deficit. The deficit has been exacerbated by significant headwinds namely global climatic phenomena such as El Nino, decline in international crop prices and the shortage and high cost of power. The aforementioned have consequently resulted in the company’s cash deficit widening to approximately US$6.36m currently.

“It is against the foregoing background that the board has seen it necessary for the company to mobilise fresh equity capital which will enhance the business’ ability to finance its working capital requirements and fund critical capital expenditure. Specifically, the company requires patient capital to enable it to procure packaging materials and inputs for packed tea and water, service debts owed to its key suppliers of fertilizers, chemicals, fuel, pay salaries and wages on time, replace the Tingamira water bottling plant and grid-tie the three solar plants and set up a modular macadamia cracking unit.”

Tanganda is a key player in the production of tea, coffee, avocado and macadamia. Management says the US$8m capital raise is critical to strengthening the company’s balance sheet and supporting its long-term growth strategy amid a challenging operating environment.