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Harare Bureau
Bakhresa Group’s takeover of Blue Ribbon is nearing completion after its judicial manager received a court order paving way for the company to transact. Blue Ribbon judicial manager Reggie Saruchera yesterday said most regulatory approvals have been secured including an operating licence for the company.
“We received a court order and other necessary approvals. What’s left is for the company to transact. There are formalities to be completed especially issues to do with immigration but those are just formalities.
“Once the formalities are complete then we can say the deal has been concluded and ready for takeoff. But as you know whenever there’s an international transaction immigration issues also come into play,” said Saruchera.
Bakhresa will assume control of Blue Ribbon Industries subject to regulatory approvals for the transaction and this will result in all shareholders, including a management consortium Orchadrian Enterprises, losing their entire interest in the company.
Blue Ribbon was owned 74 percent by Orchadrian Enterprises, 16 percent by Cereal International Limited and 10 percent by an employee ownership Trust.
Bakhresa will immediately inject a total of $20 million towards recapitalisation, clearing liabilities to creditors, workers and financial institutions.
The investment is also expected to cover cost of retrenching workers deemed excess to requirement while $6 million will instantly go towards capital expenditure.
Blue Ribbon is saddled with a total of $29.4 million liabilities made up of $2.4 million owed to PTA Bank, $1.157 million to FBC Bank, $7.4 million to Atlas Trading, $1.171 million to preferrent creditors, $696,001 statutory obligations, $7.6 million to ZB Bank and $8.8 million owed to concurrent creditors.
A further $20 million capital will be invested into the financially distressed miller over a period of five years to replace old and antiquated equipment.
This will take BRI’s capacity from an average of 35 percent to about 100 percent. It should operate at 45 percent to break even and over 60 percent for good margins.
Bakhresa Group vice President Ramesh Kumar recently said investment over the next five years will target plant and equipment and new buildings to house new plants.
BRI has been operating at 11 percent to 29 percent since 2009 due to funding constraints. Production improved when BRI signed a raw material supply agreement with Mega Market to produce and maintain product visibility.
Blue Ribbon is Zimbabwe’s second biggest food and milling firm in Zimbabwe. Its unit, Blue Ribbon Foods is a milling and stock feed manufacturer.
BRI also owns Nutresco, which produces peanut butter, corn soya blend, mahewu and soya chunks. BRI’s other unit, J.A Mitchels runs bakery operations.
Bakhresa has operations spread across a number of African countries including Tanzania, Uganda, Rwanda, Zanzibar, Kenya, Burundi, Malawi, Mozambique and South Africa, where the group has recently spread its tentacles.
The Tanzanian milling group has grain milling capacity of 5,000 tonnes per day and this is expected to increase to 6,000 tonnes per day by the end of this year.
Online Reporter