CFI’s subsidiaries placed under judicial management

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.