Zambia Forestry and Forest Industries Corporation Plc (ZAFFICO) has extended the period for its major rights issue, giving eligible shareholders and investors additional time to participate in an offer that allows new shares to be acquired at K2.53 per share.
The rights issue is one of the most significant recent capital-raising exercises on the Lusaka Securities Exchange (LuSE), with ZAFFICO seeking to raise approximately K1.012 billion through the issuance of up to 400 million new ordinary shares. The offer is structured on a one-for-one basis, meaning eligible shareholders are entitled to one new share for every existing ZAFFICO share held. (idc.co.zm)
The offer price is particularly notable because ZAFFICO shares are currently quoted at around K10.00 on the LuSE, making the K2.53 subscription price appear heavily discounted compared with the current quoted share price. However, investors should understand that rights issues affect the number of shares in circulation and the theoretical value of existing shares, so simply comparing K2.53 with the current market price does not represent a guaranteed investment return. (luse.co.zm)
ZAFFICO Rights Issue at a Glance
| Detail | ZAFFICO Rights Issue |
|---|---|
| Company | Zambia Forestry and Forest Industries Corporation Plc |
| LuSE Share Code | ZFCO |
| Subscription Price | K2.53 per new share |
| Rights Ratio | 1 new share for every 1 existing share |
| Maximum New Shares | 400 million shares |
| Target Gross Proceeds | Approximately K1.012 billion |
| Type of Offer | Renounceable Rights Issue |
| Original Closing Date | 28 August 2026 |
| Extended Closing Date | 18 September 2026 |
| New Expected Listing Date | 25 September 2026 |
ZAFFICO announced the extension through the LuSE on 26 August 2026. The revised timetable gives investors until 16 September 2026 to deal in Letters of Allocation, while the rights offer is scheduled to close on 18 September 2026. The new shares are expected to be allotted and listed on the LuSE on 25 September 2026.
What Is ZAFFICO Offering Investors?
ZAFFICO is not conducting an ordinary sale of existing shares. It is issuing new shares through a rights issue.
Under the offer, qualifying shareholders receive the right to subscribe for additional ZAFFICO shares in proportion to their existing holdings.
The final terms provide for:
1 new ZAFFICO share for every 1 existing ZAFFICO share held
at a subscription price of:
K2.53 per share
For example, an investor entitled to purchase 1,000 new shares would need:
1,000 × K2.53 = K2,530
to take up the full entitlement.
An investor entitled to 10,000 new shares would need:
10,000 × K2.53 = K25,300
to subscribe for those shares.
The actual entitlement depends on the shareholder’s qualifying shareholding and the terms of the rights allocation.
How Big Is the Discount?
The subscription price of K2.53 is considerably below ZAFFICO’s current quoted LuSE share price of approximately K10.00 as of the beginning of September 2026.
On a simple price comparison:
K10.00 − K2.53 = K7.47
That means the subscription price is approximately 74.7% below the K10 quoted market price.
However, investors should not interpret this as an automatic 74.7% profit.
A rights issue increases the number of shares outstanding. The market price can adjust to reflect the additional shares, the value transferred through the rights, investor expectations and other market factors.
The appropriate investment decision therefore requires looking beyond the headline discount.
Why Is ZAFFICO Raising K1 Billion?
ZAFFICO is raising the capital as part of a major transformation of the company from primarily selling forestry products into a more vertically integrated wood-processing and manufacturing business.
The company intends to direct the proceeds towards value-addition projects, operational improvements and expansion of its plantation resources.
One of the centrepieces of the strategy is the development of a particle board manufacturing plant.
ZAFFICO is targeting completion of the particle board plant in 2027 as part of its strategy to increase domestic production of processed wood products.
ZAFFICO Is Moving Further Into Wood Processing
The rights issue forms part of a much broader investment programme.
ZAFFICO has already invested in additional processing infrastructure, including an additional creosote treatment line and drying kiln.
These investments have increased annual pole-treatment capacity to approximately 240,000 units.
The company has also established an industrial sawmill with annual processing capacity of approximately 50,000 cubic metres.
This represents an important shift in ZAFFICO’s business model.
Rather than relying primarily on the sale of roundwood and other relatively unprocessed forestry products, the company wants to capture more value by processing timber into higher-value products.
Plantation Expansion Is Another Major Target
ZAFFICO is also expanding the forest resource that supports its operations.
The company has outlined plans to increase its plantation area to approximately 100,000 hectares by 2028.
Expanding plantations is strategically important because a larger processing operation ultimately requires a reliable long-term supply of timber.
The rights issue therefore supports both sides of ZAFFICO’s strategy: increasing the company’s raw-material base while simultaneously expanding its ability to manufacture higher-value wood products.
What Does a Renounceable Rights Issue Mean?
ZAFFICO’s offer is a renounceable rights issue.
This is important for investors.
A shareholder who receives rights is not necessarily forced to either buy the additional shares or lose the opportunity entirely. Because the rights are renounceable, the Letters of Allocation can be traded through the LuSE during the designated trading period.
This potentially allows shareholders who do not want to invest additional money into ZAFFICO to sell their rights to another investor.
The extended timetable currently provides for dealing in Letters of Allocation until 16 September 2026.
Can Ordinary Zambian Investors Participate?
The transaction has been structured to increase participation beyond ZAFFICO’s largest institutional shareholders.
The Industrial Development Corporation (IDC), ZAFFICO’s majority shareholder, holds approximately 63% of the company. IDC indicated that it would follow only part of its rights entitlement, potentially making a larger allocation available to institutional and retail investors.
This makes the transaction particularly interesting from a Zambian capital-market perspective.
Rights issues are normally associated primarily with existing shareholders, but because the ZAFFICO rights are tradable, other investors may potentially obtain rights through the market during the permitted trading period.
Investors interested in participating should confirm the applicable process and availability with a licensed LuSE stockbroker.
What Happens to Existing Shareholders Who Do Not Participate?
Existing shareholders need to understand the concept of dilution.
ZAFFICO currently has 400 million issued shares, while the rights issue provides for up to another 400 million shares.
If the full offer is subscribed, the number of shares outstanding could therefore increase substantially.
A shareholder who does not participate could consequently own a smaller percentage of the enlarged company.
For example, suppose an investor owns:
1,000 shares out of 400 million shares
and does not purchase any additional shares.
If the company subsequently has approximately 800 million shares outstanding after the rights issue, the investor still owns 1,000 shares, but those shares represent a smaller percentage of the company.
This does not automatically mean the investment has lost the same proportion of its economic value because the company is simultaneously receiving new capital from subscribers. Nevertheless, dilution is an important factor shareholders should understand.
Why Would a Company Sell New Shares at a Discount?
Offering rights shares below the prevailing market price is common because the company wants to encourage shareholders to provide additional capital.
A discounted subscription price can make participation more attractive and improve the likelihood that the company successfully raises the targeted funds.
ZAFFICO receives the subscription money and can then invest the capital into its expansion programme.
The important question for long-term investors is therefore not simply:
“How cheap are the shares?”
It is also:
“Can ZAFFICO use the new K1 billion effectively enough to create additional shareholder value?”
ZAFFICO’s Growth Ambitions
ZAFFICO has presented ambitious financial expectations alongside its expansion strategy.
The company recorded approximately K460 million in revenue for the 2025 financial year, while management projections presented during the rights issue launch envisage revenue potentially increasing to approximately K1.8 billion by 2029.
Those figures represent management projections rather than guaranteed future results.
Whether ZAFFICO achieves them will depend on factors including successful completion of its processing investments, production capacity, timber supply, operating costs, demand for processed wood products and broader economic conditions.
Potential Opportunities for Investors
The rights issue presents several factors investors may consider attractive.
ZAFFICO is raising substantial new capital for productive assets rather than simply maintaining its existing operations.
The company’s strategy includes:
- Expanding plantation capacity
- Increasing timber processing
- Developing particle board production
- Increasing value addition
- Improving operational efficiency
- Reducing reliance on primary forestry products
- Building a more vertically integrated forestry business
If these investments perform as intended, they could materially change the scale and composition of ZAFFICO’s business.
Risks Investors Should Consider
The attractive subscription price should not distract investors from the risks involved.
Potential considerations include:
- Execution risk on major expansion projects
- Cost overruns
- Delays in commissioning new facilities
- Changes in timber and wood-product demand
- Operational costs
- Exchange-rate movements affecting imported equipment
- Increased number of shares outstanding
- Future profitability
- Dividend uncertainty
- Liquidity of ZAFFICO shares on the LuSE
ZAFFICO previously elected not to declare a dividend for the 2024 financial year as it prioritized reinvestment in its growth strategy.
Investors focused primarily on dividend income should therefore consider both the company’s growth plans and its future dividend capacity.
Important Dates for Investors
ZAFFICO’s original timetable had the rights offer closing on 28 August 2026, with new shares expected to list on 4 September.
That timetable has now changed.
Following the extension announced on 26 August, the important revised dates are:
16 September 2026 – Last day for dealing in Letters of Allocation
18 September 2026 – Rights Offer closes
25 September 2026 – New shares expected to be allotted and listed on the LuSE
Investors should confirm the applicable deadlines with their broker rather than waiting until the final day to act.
What the ZAFFICO Rights Issue Means for Zambia’s Capital Market
ZAFFICO’s approximately K1 billion capital raise is significant beyond the company itself.
The transaction provides an example of a listed Zambian company using the domestic capital market to finance large-scale industrial expansion.
It could also increase ZAFFICO’s free float because IDC has indicated that it will not take up its entire entitlement, potentially allowing a larger proportion of shares to be held by other institutional and retail investors.
For Zambia’s developing retail-investment market, this gives more investors an opportunity to learn how rights issues, Letters of Allocation and equity capital raising work in practice.
Should You Buy ZAFFICO Shares at K2.53?
The K2.53 subscription price makes the ZAFFICO rights issue look attractive compared with the company’s current quoted market price, but the discount alone should not determine an investment decision.
Investors should consider ZAFFICO’s financial position, expansion plans, future earnings potential, additional shares being issued, execution risks, dividend prospects and their own investment objectives.
Existing shareholders should additionally consider what happens to their proportional ownership if they choose not to exercise or sell their rights.
Anyone uncertain about the transaction should consider speaking with a licensed stockbroker or investment adviser before committing funds.
Final Thoughts
ZAFFICO’s discounted rights issue represents a major moment for both the company and Zambia’s capital market.
At K2.53 per new share, on a one-new-share-for-every-one-existing-share basis, ZAFFICO is seeking approximately K1.012 billion to fund its transition towards a larger, vertically integrated forestry and wood-processing operation.
The recent extension gives investors additional time, with the offer now expected to close on 18 September 2026 and the new shares scheduled for listing on 25 September 2026.
For ZamFinanceInfo readers, the most important takeaway is that the headline discount is only one part of the story. The bigger investment question is whether ZAFFICO can successfully convert the capital it raises today into greater earnings and shareholder value in the years ahead.
Disclaimer: This article is for general financial information and educational purposes only and does not constitute investment advice or a recommendation to buy or sell ZAFFICO shares. Investors should review the official rights issue documentation and consider obtaining advice from a licensed investment professional before making an investment decision.