Pick ‘n Pay, backed by South African Ackerman family, unveils $220.3-million rights issue

Feyisayo Ajayi -

Key Point

  • Pick ‘n Pay launches $220.3-million rights issue to bolster finances amid operational challenges.
  • Underwritten by Absa Bank, Rand Merchant Bank, and Standard Bank, the rights issue aims to slash debt and cut interest costs.
  • CEO Sean Summers leads restructuring efforts as Pick ‘n Pay confronts $82.93-million supermarket unit loss.

Pick ‘n Pay, one of South Africa’s leading supermarket chains, partly owned by the billionaire Ackerman family, has unveiled a $220.3-million fully underwritten, renounceable rights issue to strengthen its capital base.

The move follows a series of strategic maneuvers aimed at stabilizing the company’s finances amidst operational headwinds.

Rights issue targets debt reduction

The R4-billion ($220.3 million) rights issue, approved by shareholders on June 26, 2024, is fully underwritten by a consortium of Absa Bank, Rand Merchant Bank, and Standard Bank of South Africa. It seeks to address Pick ‘n Pay’s deteriorating debt position and recent losses.

The rights issue, offering new shares to existing shareholders, will open on July 19. Proceeds will be used to reduce debt, lower interest expenses, and support the core business’s recovery in FY2025. The planned IPO of discount retail chain Boxer is expected to further solidify Pick ‘n Pay’s financial position.

Pick ‘n Pay woes deepen as supermarket unit loses $82.93 million 

Pick ‘n Pay, headquartered in Cape Town, South Africa, operates more than 2,000 stores across eight African countries. The Ackerman family holds a combined 25.53 percent stake (124,677,238 shares) in the South African retailer.

Pick ‘n Pay’s core supermarket business suffered a R1.5-billion ($82.93 million) trading loss for the fiscal year ended Feb. 25, 2024, contributing to an overall group loss exceeding R3.2 billion ($176.95 million). Rising debt levels further underscored the need for decisive action. The appointment of Sean Summers as CEO is part of Pick ‘n Pay’s restructuring efforts.

Turning the tide

Pick ‘n Pay’s rights issue reflects the company’s recent struggles. The $220.3-million offering represents a critical step to stabilize its finances and turn around its supermarket business.

As Pick ‘n Pay navigates these challenges, shareholder support and strategic leadership under CEO Sean Summers will be crucial in restoring the company to a path of sustainable growth and profitability.