Standard Group has offered a 16 percent discount on its rights issue share price, as it seeks to raise Sh1.5 billion to enable it settle debts and secure working capital.
The media company’s new shares will be sold at Sh5.29 each, a discount compared to Thursday’s stock price of Sh6.3 on the Nairobi Securities Exchange.
The Capital Markets Authority (CMA) has given Standard Group the nod to sell 283,661,120 new shares to existing shareholders to help it inject capital in the media company, whose liabilities currently exceeds total assets.
“As part of this offering, the company will issue a total of 283,661,120 new shares at Sh5.29 per share, aiming to raise approximately Sh1.5 billion,” said Standard Group.
“The issuance is structured at a ratio of 11 new ordinary shares for every three ordinary shares held.”
Rights issues shares are usually sold at a discount to the prevailing price in order to incentivise investors to participate in the cash call.
The company said it would use the cash raised to settle its liabilities which stood at Sh5.5 billion as of June 2024. Its assets stood at 4.3 billion at the time, leaving it with a Sh1.2 billion deficit.
“We have made substantial progress in streamlining operations, reducing costs, and implementing a robust strategic plan aimed at long-term financial resilience,” Standard Group chairman Julius Kipngetich said.
“The approval of this rights issue provides the vital capital injection needed to accelerate our digital-first strategy and push toward positive financial results within the next 12 months,” he added.
Standard Group was recently in the cross hairs of the governmentt, which had revoked its licence owing to a Sh48 million debt arising from accumulated regulatory fees. The group had countered by disclosing that the government owed it Sh1.2 billion due to unpaid advertising fees.
Standard Group is yet to release its financial results for the full year ended December 2024. The company had sought an extension from CMA to publish its results after expiry of the four-month period given to listed firms, to make public their performance after closure of a reporting period.
The company reported a loss of Sh111 million in the six months to June 2024 compared to a loss of Sh102 million over a similar period a year earlier.
The increase in loss position followed a 16.8 per cent drop in revenues to Sh1 billion resulting from reduced advertisement revenues as businesses cut back expenditures in a harsh economic environment. The media company has turned to cost cutting including reduction of staff numbers to protect its bottom-line.
Besides Standard Group, other listed firms that have implemented rights issues this year include Sanlam Kenya which was in the market seeking to raise Sh2.5 billion.
