PGI to surrender part of glass subsidiary?

PG Industries Zimbabwe Limited (PGI) is on the verge of disposing of significant equity in its glass-manufacturing subsidiary — PG Glass — in a desperate bid to retire mounting debt.

This would become the second such disposal of a key subsidiary by PGI following the sell-off of part of Mutare-based Zimboard.

Management also hopes that the disposal of properties with a market value of over $30 billion will steer the group’s ship away from the debt trap.
PGI’s business was made up of Zimboard, the glass subsidiary and a merchandising unit, which has consistently been the group’s major value driver.
PGI’s debt ballooned following an interest rate spike at the end of 2003 and early last year.
Developments at PGI have seen former chief executive officer Gerald Mujaji stepping down in a rumoured coup. But sources say he is still active in management.

Nyasha Zhou, who took over the reins from Mujaji, could neither confirm nor deny the developments at PG Glass, saying only that the market would be informed when the “time is right”.

“I cannot confirm nor deny that. When the time is right we will inform the market through the proper channels,” said Zhou.

PGI has indicated an intention to abort its regional operations as part of initiatives to steer the company back into profitability.

The group is making a supply arrangement with Zimboard for its merchandising business.

A large portion of PGI’s debt is attracting market-determined rates. The other part is owed under the Reserve Bank’s lower-rate productive sector funding facility.

PGI made a loss of $46.7 billion compared to a $15.7 billion profit in the comparative trading period last year in historical cost terms.
Mujaji, who along with Zhou and Chris Maswi are major shareholders through a 26.7 percent stake held in Laserson Investments, indicated last year that the group was courting investors in an effort to turn its faltering fortunes around.

600450 PGI to surrender part of glass subsidiary?
Date: 11 February 2005

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