Cape Times

Daybreak Farms ready to raise R250m in debt funding after its restructur­ing

- EDWARD WEST edward.west@inl.co.za

DAYBREAK Farms, a leading poultry producer owned by the Public Investment Corporatio­n (PIC), is planning a R250 million debt deal to stabilise the company and optimise its operations and balance sheet.

This follows a recent successful restructur­ing programme and the appointmen­t of new executives.

Last year, led by CEO Richard Manzini, Daybreak Farms was restructur­ed and a new executive team was recently announced to support the company’s growth plans.

The company holds about R1.2 billion in assets and was acquired by the PIC in 2015. Manzini, previously from the PIC, was appointed in January, having overseen the turnaround of Daybreak in his capacity as a board member before being appointed CEO.

In 2022, the PIC overhauled the board in light of reports of multimilli­on-rand irregulari­ties and it also appointed new auditors and establishe­d a whistle-blowing hotline service provider as part of establishi­ng an ethics and investigat­ions committee.

So despite the significan­t challenges in the poultry industry last year, including the outbreak of avian flu in some areas, Daybreak was now tracking towards profitabil­ity, Manzini said in a statement yesterday.

He said the main reason why the company had been able to turn around was due to the strengthen­ing of corporate governance.

From July last year, Manzini had focused on getting financial controls in place. During the avian flu pandemic, the company managed its cash more stringentl­y without access to a revolving facility or support from the shareholde­r.

“This lent credence to the fundamenta­l stacking of the business, the cost efficienci­es realised and the treasury management,” he said.

“We need about 18 months to sort out the balance sheet, starting with raising the R250m,” Manzini said.

South Africa is the biggest producer of chicken in Africa, producing close to 2 million tons of chicken a year.

Daybreak holds about 7% of the South African chicken market currently, and it anticipate­s steady growth.

Manzini said the cash raised would be used for technology upgrades of Daybreak’s abattoirs and machines, a water treatment plant, and increasing the speed of the chicken processing systems.

He said Daybreak Farms supplies its own and contracted broiler farms with day-old chicks, which are raised and sold as fresh and frozen whole chickens and portions.

With the power cuts in recent years, fresh chicken portions had become more popular.

“We are planning to tilt one of our abattoirs to focus more on fresh product mix, and we are in talks with a broader client base,” he said.

The plan was to take processing to about 1.9 million chickens a week, from 1.5 million chickens a week, in the next few months, he said.

This initial debt deal, and the restructur­ing of the company and its balance sheet, might result in an additional

investment round to build out its strategic direction as a protein foods business, he said.

“The mission is to get Daybreak, which employs 3 400 people, back to a strong market position, where it deserves to play,” said Manzini.

 ?? ?? THE CASH RAISED via a debt deal by Daybreak Farms will be used for technology upgrades of Daybreak’s abattoirs and machines, a water treatment plant, and increasing the speed of the chicken processing systems. | IOL
THE CASH RAISED via a debt deal by Daybreak Farms will be used for technology upgrades of Daybreak’s abattoirs and machines, a water treatment plant, and increasing the speed of the chicken processing systems. | IOL

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