JOHANNESBURG, Aug 5 (Reuters) – South Africa’s Pick n Pay PIKJ.J has raised 4 billion rand ($217 million) through a rights offer that was 106% oversubscribed, it said on Monday as the country’s third biggest grocery group looks to reduce its debt.

Pick n Pay, which has 2,279 stores across South Africa and seven countries across Africa said in a statement that 98.7% of shareholders exercised their rights and the group received 4.3 billion rand worth in excess applications.

Only 1.3% of excess rights offer shares were allocated to make up the 100% total subscription.

As the rights offer was fully subscribed after taking into account the excess applications, the joint underwriters were not required to subscribe for any rights offer shares, the company added.

“The successful conclusion of the rights offer demonstrates the market’s strong confidence in our iconic brand and in our turnaround strategy,” Chief Executive Sean Summers said.

“It marks a crucial first step in our recapitalisation plan, positioning the group well to fund long-term sustainable growth.”

The proceeds of the rights offer will be used to pay down debt, stabilise the retailer’s balance sheet and invest in Pick n Pay’s turnaround strategy, which includes closing or converting over 100 loss-making Pick n Pay supermarket stores.

Summers is tasked with reviving, through a turnaround and two-step recapitalisation plan, a retail business that has been losing market share to bigger rivals Shoprite SHPJ.J and others for more than a decade.

A deterioration in the performance of the group’s core Pick n Pay supermarket business resulted in a substantial trading loss in the Pick n Pay division of 1.5 billion rand and an overall loss at group level of 3.2 billion rand in the 52 weeks ended Feb. 25.

At the same time its net debt escalated to 6.1 billion rand in the year.

($1 = 18.4525 rand)

(Reporting by Nqobile Dludla; Editing by Emelia Sithole-Matarise)