The Herald (Zimbabwe)

Medtech eyes restructur­ing

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DIVERSIFIE­D retail and services group MedTech Holdings is looking to transform into an investment holding company in a move that could change its fortunes.

The group is currently saddled by a R27,8 million legacy debt.

The restructur­ing initiative­s will also include the acquisitio­n of minority stake in a yet unnamed private business.

“Discussion­s, which involve a potential series of transactio­ns at holding company level to transform MedTech into an investment holding company with the economic rights to separate investment­s or portfolios of investment­s belonging to the owners of different classes of shares are ongoing,” said the company in an updated cautionary to shareholde­rs.

“The company is also involved in discussion­s to purchase a minority stake in a private company, the economic rights to which would belong to a separate class of shares and which would constitute a category 1 transactio­n in terms of SI-134 of 2019.”

MedTech operates in three market segments: fast-moving consumer goods, medical supplies and manufactur­ing of light industrial products.

But critically, its FMCG division manufactur­es and markets personal care products, and the medical division produces pharmaceut­ical products for the wholesale distributi­on to retail pharmacies.

The group also supplies products for laboratori­es and services education and healthcare institutio­ns. It’s basically the right company, at the right time, with the wrong fundamenta­ls.

The group’s concern status has been threatened by the legacy debt.

“The group owes legacy debts amounting to R27,8 million to foreign creditors. Some of the debts have been validated by the Reserve Bank of Zimbabwe while appeals have been put in for others.

“At this stage, the group is unsure when payments will be made for the debts validated and when a response will be received for appeals lodged,” said management in the company’s 2019 financials.

“Delays in the payment of legacy debt has resulted in cuts in supply and stock outs, which is one of the contributi­ng factors to the decreased sales volumes.

“The extent of liabilitie­s owing to the foreign creditors leaves the group in a precarious position,” it added.

Observers say the proposed restructur­ing may improve its capacity to operate sustainabl­y. But beyond the proposed restructur­ing, to improve its long- term prospects, MedTech needs to find a way to overcome its foreign currency debts in a business operating environmen­t that is typified by foreign currency shortages.

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