Companies struggle to find buyers

offshore due to liquidity problems in the market and this has also seen some companies disposing of their non-core assets.
However, most of the companies, which decided to offload loss-making entities to raise working capital are now in a quandary as they are struggling to find buyers.
Some have been forced to let go of the assets for a song as discontinued operations have proved to be costly.
Aico Africa indicated to shareholders recently that it was finding it very difficult to find a suitable buyer for its frozen vegetables business, Exhort.
The group received good offers from local bidders but they failed to get support form local financial institutions.
They were then forced to settle for foreign buyers who offered a lower price compared to locals. The offer, however, could be minute if the money is earmarked for working capital.
Aico Africa again brought an early surprise to the market after issuing a cautionary statement that the group is involved in negotiations with potential investors.
Aico has been linked to a possible deal with Olam under which the latter stands to acquire a significant stake in the group.
Conglomerate CFI Holdings Limited last month also told its shareholders that it had engaged potential strategic investors to take up significant shareholding in two of its strategic business units.
The group said they are negotiating with investors to invest in Victoria Foods and Crest Poultry Group.
The investment is expected to bring fresh capital and efficiencies to the firm’s core operating divisions.
CFI said it has already signed non-disclosure agreements with interested partners and a due diligence process had commenced.
The group added that the board had proposed to undertake a capital raising initiative through a combination of equity and a medium- to long-term debt. Since dollarisation, CFI is yet to be recapitalised.
Disposal of assets comes after the group shelved its proposed rights issue of between US$10 million and US$20 million.
Shareholders did not approve the rights offer saying company shares are undervalued, which negatively affected the company’s net asset value.
CFI said the conclusion of transactions is expected to strengthen the financial position of the company.
The company also intends to raise about US$8 million through the disposal of non-core assets to retire expensive debts and finance working capital.
CFI has since received regulatory approvals for the disposal of its shareholding in Beira Grain Terminal and Windmill.
CFI is disposing its entire shareholding in its irrigation equipment manufacturing firm Dore & Pitt.
The conglomerate is owned 21,7 percent by Stanlap Investments, 7,1 percent by Messina Investments and 6,7 percent by Old Mutual Life.
In 2010 CFI franchised its Town & Country outlets to supermarket chain Afrofood and the deal is expected to last for three years.
Management at CFI also undertook a raft of structural reforms that included ceasing operations at retail subsidiary Honeydew Farm after the property was returned to its owners early in the year.
Farm & City outlets, which are also controlled by CFI, were repositioned by closing the wholesale dry grocery lines to concentrate on core business.
Meanwhile, the group’s share price has been trading on the green side and management is upbeat that the new investment through its SBUs would add value to the group.