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Harare Bureau
DAIRIBORD Holdings has joined the race to acquire a controlling stake in Cairns Holdings Limited, which plans to first de-list from the Zimbabwe Stock Exchange to simplify the process of getting fresh investment.A total of four suitors are vying for a majority interest in Cairns and the others include local private company, Judah Holdings Limited and South African firms Vasari Global and Eastern Trading Company Limited.
The investors are largely targeting to acquire Reserve Bank of Zimbabwe’s 67 percent shareholding in the group.
The RBZ is selling its investment to pay-off debts. Judar Holdings is into agriculture, brick moulding and mining, Vasari Global is a multi-strategy investment firm and Eastern Trading is into canning and related products.
Dairibord once flirted with Cairns when it bought and later sold 40 percent shareholding in Charhons, a subsidiary of Cairns Group.
The majority of shareholders and creditors of the Cairns Holdings yesterday approved the judicial manager’s proposal for a scheme of arrangement to bring in the new investor.
Yesterday’s meeting was organised to allow for proof of claims, consider delisting the group from the ZSE and giving shareholders and creditors an update on the investor.
“The judicial manager proceeded to invite bidders to tender for the acquisition/investment in the CHL group.
“The submission of bids closed on 26 April, 2013 and bids were opened on the same day in the presence of all bidders,” said judicial manager Mr Reggie Saruchera in his report.
Following evaluation of the bids, Mr Saruchera told the shareholders and creditors, bilateral discussions had commenced.
Cairns Holdings was put under judicial management in November last year after facing liquidity and working challenges, which the new investor is expected to ameliorate.
The new investor would be selected on the basis of the amount he will offer to pay creditors, number of employees taken over and amount set aside for once off payment of workers not required for continuing operations.
The investor would also be assessed on the amount set aside for working capital, refurbishment or replacement of plant and equipment in the medium to short term, their ability to turnaround the group and proof of funding.
Cairns owed creditors and financial institutions about $11 million and planned to use proceeds from the disposal of some non-core assets to pay-off some of its debts.
Among the assets initially earmarked for disposal, Cairns would for now hold in abeyance the sale of factories in Mutare, Bulawayo and Charhons in Harare in the wake of the bidding process set to result in fresh investment.
However, the judicial management has secured $1 million DIMAF loan from CABS for working capital and capital expenditure, which would double sales in the snacks, fruits and vegetables divisions as well as at Charhons.
Mr Saruchera said there had been notable improvement in the operations of the company since he took over last December.
Profitability improved from a $116 loss to profit before tax of about $1 million, working capital shot to $653 000 from $120 000 and capacity utilisation grew from 5 percent to 20 percent (30 percent snacks).
Monthly turnover has grown to $1,4 million in May 2013 from $400 000 in December last year while 75 percent of the staff has been returned to work. Initially, 50 percent of the group’s workers had been put on unpaid leave.
However, remaining challenges include old machinery that breaks down intermittently, inefficiency of machinery, working capital and raw material shortage, regular power cuts and lack of credit terms from suppliers.
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