The Standard Group PLC has received a major boost after being granted the go-ahead to raise Ksh1.5 billion from shareholders through a rights issue by the Capital Markets Authority (CMA).
Standard Group said that the funds will strengthen the media firm’s balance sheet and support its digital transformation strategy as part of a broader reorganization to return to profitability.
According to Investopedia, a rights issue is an invitation from a company to its existing shareholders to purchase additional shares in the company.
This type of issue offers these shareholders securities called rights and offers companies a chance to raise additional capital to finance their strategies without going for expensive options such as debt.
The shares offered are at a discount to the prevailing market price.
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CMA Approves Standard Group Ksh1.5B rights issue
According to the media firm, shareholders approved the rights issue during their annual general meeting in September.
“The Authority has reviewed the documentation and information memorandum submitted in support of the application for the increase in the share capital of the company through issuance of additional rights to existing shareholders and is satisfied that adequate disclosures have been made as required under the 12th schedule to the Capital Markets (Securities) (Public Offers, Listings and Disclosures) Regulations 2023,” said CMA chief executive Wycliffe Shamiah in a letter to the Standard Investment Bank, the lead transaction advisor in the rights issue.
“Consequently, in exercise of the powers conferred to the Authority by the Capital Markets Act and Regulation 16 of the Capital Markets (Securities) (Public Offers, Listings and Disclosures) Regulations 2023, the Authority hereby approves the rights issue and listing of additional shares in accordance with the submitted information memorandum.”
The company views the rights issue as a key element of its new long-term strategy. When it authorised the issue, Standard Group’s board said the proceeds would be used to “restructure its balance sheet to be able to take advantage of emerging future opportunities for the business in a digital era.”
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Restructuring
The media house has been implementing a turnaround plan after navigating turbulent times marked by declining revenues and layoff, with the company now expected to return a profit this year.
As part of the reorganisation, the Group has put in place measures to weather navigate the challenges that the industry is grappling including delays in settling pending bills owed to media companies by the national and county governments, changing content consumption patterns and increased fragmentation.
The Standard Group had in July 2024 declared over 300 employees redundant as part of a reorganization plan.
In addition, the company promised a one-year redundancy payment plan with instalments scheduled for September, October, and November 2024.
However, some former employees have since lamented that they have not received any payments.
Already, Standard Group has installed a new leadership team at the management and board levels, including the appointment of Group Chief Executive Officer Marion Gathoga-Mwangi in August 2024 and Chaacha Mwita as Chief Executive Editor last month.
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