June 18, 2020 / 8:07 AM / 19 days ago

UPDATE 2-South African retailer TFG looks to raise $229 mln via rights issue

* HEPS down 1.1%

* Rights offer proceeds for lowering debt

* Not interested in rival Edcon

* TFG cuts dividend this year (Adds Kenya and Ghana exit)

By Nqobile Dludla

JOHANNESBURG, June 18 (Reuters) - South African retailer TFG said on Thursday it planned to raise 3.95 billion rand ($229.66 million) through a rights offer to lower its debt and protect its balance sheet, as profit fell by 1.1% in the year to March 31.

TFG, which also operates in Australia and Britain, said the proposed rights offer was fully underwritten by a syndicate of banks comprising three of its largest lenders, and its major shareholders have shown support.

“The intention really is to put us in a position to insulate the balance sheet against any shocks,” TFG group CEO Anthony Thunström said at the firm’s results presentation.

He also announced the company would axe its dividend to shareholders this year.

“We’re confident that the sizing of this capital raise covers us for pretty much anything that is foreseeable in our scenario planning,” Thunström said.

The proceeds from the rights issue will also be used to invest in the business, with particular focus areas being e-commerce and the firm’s local manufacturing initiatives, Thunström said, adding that the money might also be used for any attractive acquisitions.

He squashed speculation that the clothing and homeware retailer was interested in rival Edcon, which is in bankruptcy protection and is up for sale.

“They don’t fit strategically with us,” he said.

TFG has taken the decision to exit Kenya and has left Ghana following a review last year, Thunström told Reuters in an interview.

Over the last six-months the Kenyan government has increased import duties, in some cases doubling them, and landlords are demanding dollar-based rentals, he said.

“It’s totally, utterly unviable to be in Kenya. We’ve given notice and we’re going to exit Kenya.”

It has four stores in Kenya and had five stores in Ghana.

$1 = 17.1571 rand Editing by Olivia Kumwenda-Mtambo, Tim Cocks and David Evans

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