Lobels mulls sale of assets to pay debts

meeting was granted by the High Court early this month.
In a notice of scheme of meeting, chairman Mr Afaras Gwaradzimba said secured and unsecured creditors were expected to agree on the scheme of arrangement.
“The purpose of the meeting is to consider and, if deemed fit, to agree to the scheme, the basic characteristic of which Lobels Holdings and Lobels Bread shall sell some of their assets to settle the amounts owed to creditors of Lobels Bread,” Mr Gwaradzimba said in a notice.
In terms of the order of court, Mr Gwaradzimba will report the results of the meeting to court and a counsel may be heard on March 7 2012.
It is estimated that Lobels owes US$15 million to banks, including US$4,1 million and US$1,5 million to NMB Bank Limited and FBC Holdings Limited respectively.
Indications are that the banks had agreed to have their money converted into three-year debentures at 15 percent interest per annum.
Lobels was once the country’s leading bread-maker, but has of late been driven to the brink of collapse by mounting debts.
At its peak, the firm produced about 300 000 loaves of bread a day. But there has been a sharp decline in production in the past few years due to inadequate funding for retooling and supporting operations.
Initially, Lobels wanted to pay its creditors last year but the scheme was abandoned as the new investor was supposed to inject working capital to facilitate reopening of the confectioners’ Harare bakery and repay creditors.
The firm has since resumed limited production and is operating on the basis of the concept framework devised by its advisors.
In a bid to salvage its future Lobels engaged leading financial advisors CBZ Bank and renowned lawyers Dube, Manikai and Hwacha to devise a framework to revive the firm.
The sale of its property to pay off US$600 000 to the National Social Security Fund in statutory obligations was also halted to allow the implementation of the proposed transaction with the new investors.
It is understood the new investors are committed to inheriting the debt.