admin
CREDITORS and shareholders of Cairns Holdings Limited have approved the takeover of the company by a local investor, Takura Holdings, in a deal worth $30 million.
The transaction was approved by the creditors and shareholders of Cairns at a meeting in Harare on Wednesday.
The move is expected to pave way for the resumption of full scale operations at the company.
Cairns Holdings Judicial Manager, Regis Saruchera, confirmed to ZBC News that the revival of the agro food processing company was now imminent.
He said the endorsement of the takeover deal by the company’s investors was a reflection of their commitment to restoring viability to full capacity levels.
Cairns Holdings has in the past three years been operating below full capacity on the back of huge debts.
Market watchers, however, say the takeover transaction will also pave way for the creation of new jobs and revival of exports by the company.
Takura Capital seeks to take over 63 percent shareholding in former listed concern, previously held by the central bank.
Saddled with up to $25 million debt, the company was placed under provisional judicial management in 2012 and final judicial management in February 2013 due to insolvency.
It voluntarily delisted from the bourse during the same year.
Previous attempts by South African firm, Vasari Global to take over the business failed due to delays in regulatory approval and also by the major shareholder, the Reserve Bank of Zimbabwe through its special vehicle, Fintrust, which took two years.
A “Yes” vote will see Takura inject $14 million to recapitalise the business and pay creditors, with results expected today, 48 hours after the vote.
Should the shareholders and creditors opt for liquidation of the company, the company’s judicial manager, Saruchera of Grant and Thornton, said RBZ would get nothing, preference creditors 100 percent, employees 60 percent, banks 35 percent and other unsecured creditors 35 percent.
“The rational is we’ve no option. We’ve got our backs to the wall and we need to move forward,” he said.
During Wednesday’s meeting Saruchera told creditors that Takura Capital was selected on March 16 after going to tender and approvals and other processes were completed in May.
He said there was a need to recapitalise the business and replace plant and equipment so that the business can operate sustainably.
The meeting sought to consider and approve or reject the rescue plan put together by the judicial manager. If the plan is approved, the first payment is expected within 30 days after registration of the scheme with the High Court.
“Takura Capital will invest $7 million into the business on signing of the agreement and the other $7 million will be paid to the scheme participants,” said Saruchera.
He said the investor would immediately inject $2,7 million which will be supported by another $4,5 million to get the business running at full capacity.
“The purpose of this is to deal with the issues of high repair and maintenance costs and also the ability to increase our production capacity,” Saruchera said.
He said once an agreement had been signed, minority shareholders would receive $643,000 while the major shareholder, RBZ will get preference shares worth $1 million and the balance of $271,000 will be paid within 12 months.
Saruchera said preference creditors will get 12 percent of their debt and the balance will be converted into a debenture payable in five years at five percent interest in the case of the Zimbabwe Revenue Authority.
Workers will get 20 percent down payment and the balance of $1,8 million will be paid within five years.
Concurrent creditors such as banks will get 30 percent and 45 percent preference shares while the balance will be paid in five years with a grace of six months in terms of interest.
Trade and other suppliers will get a 12,5 percent deposit and balance of $2,9 million payable in five years.
Previously, the company secured a $1,350 million loan from CABS under the distressed companies fund (DIMAF). It has repaid part of the loan, leaving a balance of less than $500,000.
The judicial manager disposed of the Charhons factory and realised $1,7 million of which $650,000 was paid to Stanbic Bank; $250,00 relocation costs; $400,000 was used to recapitalise the business and a dividend to creditors of $400,000 was paid.
When Saruchera took over the affairs of the company 2012 it had a turnover of $12,3 million and an operating loss of $4,4 million. Sales in 2013 went up to $15,3 million and $22 million in 2014.
Cairns has two subsidiaries, Cairns Foods Limited and EM Charhon.
Cairns Foods has five SBUs — snacks, vegetables and fruits, groceries, Charhons and beverages. — ZBC News/The Source
Online Reporter