By Business Reporter – OK Zimbabwe is grappling with a mounting debt crisis, with obligations totalling nearly US$30 million accumulated over recent years.
A detailed breakdown of the arrears shows the company owes US$24 million to suppliers, US$5.12 million in other payables such as utilities and service providers, and US$880,000 in statutory obligations.
The company is currently incurring annual finance costs of US$3.1 million, which it says are no longer sustainable.
The debt burden, which has grown progressively over time, has been attributed to ineffective debt management, operational inefficiencies, and dwindling supplier confidence.
These issues, combined with sustained financial losses, triggered an executive shake-up earlier this year.
In response, the board reappointed longtime former CEO Willard Zireva as executive chairman. Zireva, who previously led the company for over 20 years before retiring, was brought back to stabilise the business after the abrupt resignation of board chairman Herbert Nkala, as well as the voluntary exits of CEO Maxen Karombo, CFO Phillimon Mushosho, and supply chain director Knox Mupaya.
Shortly after his return, Zireva and the new interim leadership team outlined a turnaround strategy centred on raising US$30.5 million to clear the company’s debt. This plan includes:
- US$20 million through a renounceable rights issue, allowing shareholders to buy 1.37 new shares per each share held at a discounted price of US$0.0109, payable in US dollars.
- US$10.5 million from the sale of select immovable properties, focused on high-demand assets, with provisions for lease-back agreements to maintain operational continuity.
According to a shareholder circular, 73 percent of the issued share capital—controlled by NSSA, Datvest Nominees, and Old Mutual—has pledged full support via irrevocable commitments and underwriting guarantees.
The remaining US$5.4 million in the rights issue remains uncommitted, but the company has secured additional underwriting arrangements to cover the gap. The offer will open on July 21, 2025, and close on August 4, 2025, with trading of new shares commencing immediately after allotment.
In addition, NSSA has expressed interest in acquiring the OK Gweru and OK Malvern branches for US$4 million, subject to due diligence.
Internally, the company is undertaking reforms to address long-standing structural weaknesses. These include inefficient capital allocation, poor cash flow management, delays in supplier engagement, and a lack of responsiveness to market shifts. Externally, OK Zimbabwe continues to face intense pressure from informal retailers who enjoy regulatory leniency and lower operating costs.
To manage this transitional phase, the interim executive team—comprising Zireva, former CFO Alex Siyavora, and new supply chain director Muzvidzwa Chingaira—will oversee operations until the end of the financial year. A new executive leadership team is expected to take over thereafter, tasked with implementing a long-term recovery strategy.
If successfully executed, the debt clearance and recapitalisation programme could significantly reduce financecosts, restore supplier trust, and position OK Zimbabwe back on a sustainable growth path.