| Wed 6 Jun 2001, 0:00 | | Heaven Restructuring Allows Group To Refocus On Co |
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The Sweets from Heaven group has negotiated the financial restructuring of
its R14 million debt to provide itself with a balance sheet off which to
restore its profitability based on its core South African operations and the
potential of its North American businesses.
The long term debt has been subordinated to the tune of R8,4 million in
interest free shareholder loans, convertible to zero coupon redeemable
preference shares at 17 cents per share and in two tranches of R2,8 million
each - the one bearing interest at prime less 1% repayable over 3 years
commencing 1 November 2001 and the other interest free until 1 November 2004
and then repayable over 3 years at prime less 1%.
"This emphatic support from our major creditors and financial institutions
spells out their confidence on our potential for recovery and success and of
our commitment to succeed" says Group CEO Laurie Davidoff.
"It has also left us with a much stronger balance sheet, epitomised by a
reduction in gearing from 9,4 to 4,2 to 1 and, having taken the blow on the
chin, left us with that potential to succeed. A R1,23 million positive cash
flow from operations has helped to substantially reduce interest-bearing
borrowings from R8,5 million to R3,04 million"
That potential has been endorsed by the group's return to profitability,
albeit it modest. Operating profit on the back of a 12,2% lower turnover at
R 44,47 million - stripped of the terminated Australian operations - is 74%
up at R1,67 million and headline earnings returned to the black at R107 000
or 0,1 cents a share against the R2,51 million (3,1 cents a share) loss of
the previous year.
The bulk of this improvement was generated by the South African operations
with an accompanying flow of cash from the twenty five company-owned stores
and forty two franchise outlets.
Heaven's offshore component comprises its forty two holdings in the USA and
a wholly-owned outlet in the UK.
"Although disappointing to date, the potential of Heaven USA with its 58
stores clustered mainly on the Eastern seaboard of the USA, Indonesia and
the Bahamas, remains" says Davidoff. "The UK outlet at Bluewater Mall in
Kent performed satisfactorily."
Looking ahead, Davidoff sees the withdrawal from Australia and the balance
sheet pruning of the US investment as compounding the steady improvement in
the South African core operations.
"The strong base from which to build up again, provided by the well
structured refinancing of the group, will allow us to restore profitability
in those key areas" he says.
FOR FURTHER INFORMATION, PLEASE CONTACT:
SETON THOMPSON 0828979365
