adminGolden Sibanda Senior Business Reporter
CREDITORS of Blue Ribbon industries will meet early next month to consider Tanzanian milling giant, Bakhresa Group’s $40 million bid to acquire the company in terms of a scheme of arrangement of the company.
This marks major strides by Bakhresa towards concluding the deal for the acquisition of Blue Ribbon Industries following hurdles posed by a pressure group opposed to the takeover the milling company by a foreign investor.
Progress in the efforts to secure an investor for the cash strapped firm had also stalled due to protracted negotiations with Government over its indigenisation plan, with the prospective investor insisting on a lengthy period.
Bakhresa is expected to inject $18 million immediately upon acquiring Blue Ribbon to start meaningful turnaround of one of Zimbabwe’s oldest millers.
Judicial manager Mr Reggie Saruchera confirmed in an interview last week saying once the creditors endorse the deal, the investor would swiftly move in.
He said “members are meeting on September 2, 2015 to vote on the company’s scheme of arrangement” to consider, in the main, one resolution, the proposal by Bakhresa to acquiring majority stake in Blue Ribbon.
Mr Saruchera said once the scheme of arrangement has been “passed they (Bakhresa) will move in and invest $18 immediately and the balance over time”.
“Everything has been agreed, the investor is bringing in $18 million immediately on taking over and the balance will be spread over time,” he said.
He said that the balance for a total investment package of $40 million would depend on what needs to be revamped to turnaround the miller’s fortunes.
The efforts to secure investment to recapitalise Blue Ribbon faced threats from Grain Millers Association of Zimbabwe, which argued milling was a reserved sector.
In terms of Indigenisation and Economic Empowerment Act, certain sectors including milling, transport, salons, retail and bakery are reserved for local.
The group has operations in Tanzania, Zanzibar, Uganda, Kenya, Rwanda, Burundi, Zambia, Malawi and in Mozambique with plans afoot to spread other countries. The Tanzanian based milling giant has annual turnover of more than $600 Million and employs more than five thousand workers.
GMAZ also argued that Bakhresa’s proposal to defer complying with indigenisation requirements for a 10 year period negated Government objectives.
Further, the grain millers association claimed that there were local millers who had the capacity to take over Blue Ribbon and preside over its recovery.
But industry sources dismissed the claims as figment of imagination due to the fact that few locals have financial resources to match the required capital.
Earlier, it was alleged that agreement had been reached on most aspects of the deal, but sticking issues had remained on compliance with equity laws.
Speculation was rife that Bakhresa had agreed to acquire 75 percent stake in the miller and then gradually reduce its stake to the required threshold over time.
The country’s equity laws require foreign investors to hold a maximum of 49 percent in local companies, except where Government gives special exemption.
But it now seems Bakhresa has been able to negotiate its way past the hurdles and appears set to acquire controlling interest.
Blue Ribbon at one point stopped operations due to funding constraints, before resuming operations last year after an agreement with a raw material supplier.
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