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CFI Holdings is seeking to recapitalise its business through a $20 million rights issue while an agreement with Fidelity Life Assurance over an 834 hectare farm in Water Falls will see the group extinguish its short-term debt. CFI group chief executive Mr Steve Kuipa said the transaction with Fidelity Life would leave the group with an offshore long-term loan of $2,3 million, which can be sustained with the current operations once additional supportive strategies were put in place.
“We are pleased that at the end of May 2015, the group received an acceptable offer from Fidelity Life Assurance for the acquisition of land at our Langford Farm, in Waterfalls,” Mr Kuipa told shareholders at the annual general meeting last Friday.
“Negotiations were concluded and the interest burden of $320 00 per month has ceased to impact on the group as at 31st of May 2015.
“This important milestone has right aligned gearing levels for the group and should make it attractive to investors thereby increasing the group’s chances of raising capital successfully,” Mr Kuipa added.
With a clean balance sheet, Mr Kuipa was confident shareholders will support the rights issue adding that a few pending issues were presently being finalised.
“The rights issue mechanics and structure are being finalised and we will shortly be making the necessary announcements once the pending issues are finalised. We are hoping that this will be in time so that the impact of the re-capitalisation is felt fully right at the onset of the new financial year,” he said.
The group’s financial year commences on October 1.
Mr Kuipa said the rights issue and the subsequent recapitalisation programme would boost performance of the company going forward.
“In our view, the resolution of the two matters will mark a definitive turning point that should see the group returning to profitability in 2016.
“Beyond this, we are working towards resolving the capitalisation challenges that confronts our entities, particularly the poultry division.
“The persuasion is to pursue joint ventures with strategic and technical investors at some of the subsidiaries in order to further underpin the available businesses’ competitiveness.”
Mr Kuipa commended the Government for regularisation of the development issues affecting Saturday Retreat Farm that had been settled illegally.
The group has formally registered over 9 000 stand occupiers who are now paying for the land.
The group is set to realise at least $17 million from collections in the next four years in compensation of land.
“This should go a long way in resolving legacy debts and residual capitalisation challenges confronting the group,” said Mr Kuipa.
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