CFI’s sub­sidiaries placed un­der ju­di­cial man­age­ment

Chronicle (Zimbabwe) - - Business - Martin Kadzere Harare Bureau

CFI Hold­ings’ key sub­sidiaries have been placed un­der pro­vi­sional ju­di­cial man­age­ment to al­low for debt re­struc­tur­ing, re-or­gan­i­sa­tion and re­cap­i­tal­i­sa­tion of the en­ti­ties.

The High Court granted the or­der to have milling com­pany Vic­to­ria Foods and stock feed pro­ducer Agri­foods placed un­der pro­vi­sional ju­di­cial man­age­ment last Wed­nes­day. The two com­pa­nies re­quire about $12 mil­lion for re­cap­i­tal­i­sa­tion.

Mr Regis Saruchera of Grant and Thorn­ton was ap­pointed the pro­vi­sional ju­di­cial man­ager.

CFI said the two com­pa­nies have well recog­nised brands with sig­nif­i­cant brand eq­uity and tremen­dous mar­ket op­por­tu­ni­ties.

“The board looks for­ward to a re­bound of the two op­er­a­tions in the short to medium term,” said CFI in a state­ment.

Ac­cord­ing to af­fi­davits filed at the High Court, the rea­sons for poor per­for­mance of Agri­foods in­cluded in­ad­e­quate re­cap­i­tal­i­sa­tion, ex­pen­sive raw ma­te­ri­als, the use of old equip­ment, loss of skills while the com­pany had a neg­a­tive work­ing cap­i­tal po­si­tion.

Var­i­ous cred­i­tors had ob­tained or­ders and writs of ex­e­cu­tion against the com­pany as­sets.

About $6 mil­lion is re­quired for re­cap­i­tal­i­sa­tion with pro­jected rev­enues ex­pected to pro­gres­sively rise from $25 mil­lion next year to $40 mil­lion by 2020. Re­cap­i­tal­i­sa­tion op­tions would in­clude joint ven­tures or part­ner­ships as well as toll man­u­fac­tur­ing.

Since 2012, an­nual rev­enues have dropped dras­ti­cally from $52,7 mil­lion to $14 mil­lion last year.

Sim­i­larly, rev­enues at Vic­to­ria Foods de­clined to $10,3 mil­lion from about $24,4 mil­lion in 2011.

As at June 2016, cur­rent li­a­bil­i­ties stood at $17,7 mil­lion, well ahead of its cur­rent as­sets. Ca­pac­ity util­i­sa­tion is av­er­ag­ing 24 per­cent and the com­pany is un­der pres­sure from cred­i­tors.

Vic­to­ria Foods will re­quire $6 mil­lion for re­cap­i­tal­i­sa­tion. It has in­stalled milling ca­pac­ity of 147 000 tonnes per year. In a note to share­hold­ers, CFI said the group has con­cluded a debt com­pro­mise and set­tle­ment agree­ment with lo­cal banks owed $16 mil­lion.

This has re­sulted in the group debt de­clin­ing to $4,8 mil­lion. Shares of the com­pany will con­tinue trading nor­mally.

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