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Golden Sibanda Senior Business Reporter
SOUTH African firm Vasari Global’s bid to acquire Cairns Holdings is back on track after the parties agreed on a valuation following disputes over the purchase price.
Sources said it was now more certain the South African company would take over Cairns after the deal appeared to hit a brick wall while the other initial suitors were put on alert. They, however, could not disclose the agreed purchase amount.
The bidders for the central bank’s stake were local companies Dairibord Holdings and Judah Holdings Limited and South African firms Vasari Global and Eastern Trading Company Limited, but the judicial manager settled for Vasari.
Vasari Global had allegedly expressed reservations over the purchase price the Reserve Bank of Zimbabwe had quoted for its 67 percent shareholding in the delisted company. The argument was that huge fresh capital injection was required to bolster the firm’s operations, purchase new equipment, pay debts and clear outstanding obligations to workers.
As such, the parties to the deal had to enter a fresh round of talks to iron out points of divergence, but judicial manager Mr Reggie Saruchera had kept the other suitors in the wings when there appeared to be little progress with Vasari.
“There has been a lot of progress on the deal. It is highly likely that Vasari is coming on board, the chances have gone up. They have now reached an agreement with the shareholder and the judicial manager may soon be considering convening a scheme meeting (at High Court),” a source said.
The scheme meeting at the High Court would ensure a binding agreement among stakeholders including shareholders, creditors and employees on the terms of the deal.
Vasari argued that it would not accept the RBZ’s desired price, which the investor believed was too high for a firm that was making losses and had a negative capital.
But the RBZ insisted that the price was justified considering Cairns’ brand equity and its potential to quickly turnaround its fortunes once the company was fully recapitalised.
The company has since returned to profitability after exponentially ramping up production capacity from a record low of 10 percent in 2010 to just above 35 percent now.
This follows acquisition of new equipment by the former Zimbabwe Stock Exchange-listed firm after it accessed funding under the Distressed Industries and Marginalised Areas Fund to buy equipment for snacks and canning business.
The investment proposal by Vasari follows the approval by the majority of shareholders and creditors of the company in June of the judicial manager’s proposal for a scheme of arrangement that would bring in the new investor last year.
Cairns is a fast moving consumer goods manufacturer with particular interest in vegetables, snacks, chips, groceries and beverages. The brands are household name in Zimbabwe.
Online Reporter