Sundaymail Editor
Africa Moyo
BLUE Ribbon Industries has found a suitor prepared to invest more than US$40 million in exchange for a 75 percent stake in the business, judicial manager Mr Reggie Saruchera has said.
The yet unnamed investor is expected to be unveiled before the end of the year.
The new details put paid to market rumours suggesting Blue Ribbon CEO Mr Mike Manga and other players in the milling industry were frustrating a Tanzanian firm that had been linked to a takeover of the company, Bakhresa Group, in order to continue exercising control over the firm.
There were reports that the Bakhresa deal had fallen through after being fiercely resisted by the Grain Millers Association of Zimbabwe, which did not want a foreign firm to take over the business.
The Indigenisation and Economic Empowerment Act puts a 49 percent ceiling to the amount of shares that foreign investors can hold in some local businesses, especially those in minerals extraction.
A controlling 51 percent stake is reserved for locals.
But the milling industry is among 14 sectors exclusively reserved for Zimbabweans.
Bakhresa is understood to have sought a 10-year exemption from the empowerment law.
Mr Saruchera said it became necessary to consider a foreign investor because of the sheer amount of cash needed to drive the business.
“It (the deal) is now close. The minister (of Industry and Commerce Mike Bimha) recently said the investor was approved; so, we are now working on finalising issues that include legal issues to allow the investor to come in.
“I can tell you that a foreign investor is coming in. Just know that it is a foreign investor, names are not necessary at this point. Blue Ribbon requires a big player to come and assist the local milling industry.
“Blue Ribbon requires a big investor who brings in capital to the tune of US$40 million; it is not money you get from anybody on the streets.
“(For) working capital alone, which is needed to buy things like wheat, we need in excess of US$10 million, and that money can only be brought in by a big player. We want to have the investor before end of the year,” said Mr Saruchera in an interview last week.
Some food industry stakeholders told The Sunday Mail Business that GMAZ was opposed to Bakhresa’s investment in Zimbabwe because the Tanzanian firm has a reputation for being agressive.
Bakhresa is ultra competitive in the markets it invests in, and is known for knocking down prices in Mozambique and Uganda.
“Local millers were opposed to the coming in of Bakhresa because it is a top company with massive equipment that helps it to reduce production costs and it does not hesitate to reduce prices of products.
“So these guys do not want competition as it will put a strain on their profitability,” said an official.
Blue Ribbon employees have also questioned GMAZ’s motives in resisting the Bakhresa deal, which has potential to create 300 new jobs.
GMAZ chair Mr Tafadzwa Musarara’s mobile phone went unanswered last week.
Bakhresa is the largest miller in Tanzania, Zanzibar, Uganda, Kenya, Malawi, Zambia, Mozambique, Burundi, Rwanda and Seychelles, employing more than 5 000 people.
It has investments in food and beverages, packaging, logistics, marine passenger services and real estate.
Blue Ribbon resumed operations mid-2014 after a two-year break occasioned by funding constraints and a US$30 million debt overhang. US$2 million of that debt was owed to PTA Bank, which extended a loan for working capital in 2010.
The debt was supposed to have been repaid by July 2011.
Now plans are underway to re-open the Bulawayo branch next month.
Blue Ribbon, makers of the popular maize meal brands Chibataura and Ngwerewere, wants funding to retire its debt as well as for rehabilitation of machinery and equipment, and for working capital.
Online Reporter