Listed tea producer Tanganda Tea Company Limited is still weighing a proposed US$8 million capital raise through a rights issue as it seeks to stabilise its working capital position and revive stalled recapitalisation efforts.
Company secretary Sharon Kodzanai confirmed that the renounceable rights offer, which would be extended to existing shareholders in proportion to their shareholding, remains under consideration as the board explores options to shore up the balance sheet.
She said the company is finalising a shareholder circular that will include notice of an Extraordinary General Meeting, at which investors will be asked to approve the proposed capital raise. Kodzanai cautioned that the transaction could have a material impact on Tanganda’s share price and advised shareholders to continue exercising caution until a full announcement is released.
The contemplated fundraising comes as Tanganda grapples with mounting financial pressure in a difficult agri-export environment characterised by declining global tea prices. For the 2024 financial year, the company posted revenue of US$26 million and a net profit of US$1.4 million, but operating cash flows were negative at US$2.4 million, highlighting persistent liquidity constraints.
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Debt levels have also risen sharply, climbing from US$2.5 million in 2023 to more than US$6 million by 2025, reflecting increased reliance on borrowing to sustain operations and service existing obligations.
Operational challenges have further strained performance. Bulk tea production fell 6 percent year-on-year in a recent quarter due to delayed rainfall, while avocado output dropped 47 percent following a hailstorm and the effects of a biennial bearing cycle. Macadamia nut harvests declined 43 percent as extreme heat conditions weighed on yields.
Although quarterly revenue surged 65 percent to US$5.6 million, Tanganda recorded a loss after tax of US$774,762, underscoring the impact of lower crop volumes and continued investment spending.
To bridge its funding gap, the board has approved additional financing measures alongside the proposed rights issue. These include the planned disposal of non-core assets valued at approximately US$4.5 million, with proceeds expected within 40 days of signing a final agreement, subject to shareholder approval.
The company is also in advanced discussions with a financial institution over a US$2.5 million bridging facility, while engaging regulators as part of a “robust process” to secure an underwriter for the rights offer.
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