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under a concept framework that came into effect yesterday to resuscitate the firm.
Under the plan, Lobels’ assets have been transferred to Lobels (1) and capitalised as follows; 98 percent through debentures and 2 percent through ordinary shares owned by Lobels to be changed over in favour of the trustees of the debentures.
A debenture is a medium- to long-term debt instrument used by large companies to borrow money.
Lobels (2) had to lease assets from Lobels (1), operationalise the equipment and raise funding to operationalise the business.
Lobels (2) has to pay rentals to Lobels (1), which will be used to redeem liabilities due to banks and other creditors.
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Lobels owes banks about US$15 million and trade creditors approximately US$4 million and the amount due to banks has been attracting interest at rates ranging between 15 and 45 percent per annum.
The company’s resident director, Retired Brigadier David Chiweza. told Herald Business that Lobels was making good progress in implementing most of the strategies stated in the framework.
“We are making good progress as we are proceeding on the milestones set by the concept framework, but we are not yet in a position to announce some of the developments we have made.
“In terms of production we will be upping our output if we fully go back into the market,” he said.
“Lobels is already operating on the basis of the concept frame and we are making good progress,” said Rtd Brig Chiweza.
According to the plan, what is due to each one of the banks would be converted into a three-year or other term debenture.
Assets in Lobels (1) would form the security of the debenture and administered on behalf of the debenture holders by the trustees whereby CBZ Bank, Dube, Manikai and Hwacha and a representative of other creditors would be appointed trustees.
The plan also states that shareholding in Lobels (1) would initially be held by the trustees and ultimately by the investor.
However, Rtd Brig Chiweza refused to reveal developments on the discussions with the prospective investors.
“We do not need to disclose some of the information at the wrong time,” he said.
The major aim of the plan as outlined in the concept is to give an opportunity to all stakeholders to obtain maximum value out of the Lobels assets.
Under the plan, 138 trade creditors will be paid US$30 000 each amounting to about US$475 000 whereas the 15 to 20 outstanding creditors excluding the banks who are owed larger amounts will be paid 30 percent of what they are owed. The balance will be converted into debentures.
“We are hoping that by August 31 all creditors will be paid accordingly as indicated by the concept frame,” said Rtd Brig Chiweza.
According to the concept frame, capacity utilisation at Lobels has dropped to an all-time low of 20 percent.
An official told Herald Business early this month when the Harare plant reopened that they were producing between 15 000 and 20 000 loaves a day against the company’s current target of 100 000 loaves per day.
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