adminTALKS between the Industrial Development Corporation (IDC) and an investor who it was courting to recapitalise its edible oils manufacturing subsidiary, Olivine Industries, have collapsed, IDC group chief executive officer Mr Michael Ndudzo said yesterday.The state-owned IDC announced last year that it was engaged in negotiations with an unnamed partner to inject fresh capital into Olivine.
The IDC and AICO Africa Limited jointly own Olivine Industries with 51 percent and 49 percent stakes respectively.
Mr Ndudzo said the investment deal had fallen through.
He said the investor had been put off by a number of issues including the negative perception about the business environment in the country.
“The investor we thought was coming through has withdrawn and we are recompiling plan B,” he said.
“A lot of things caused the deal to collapse; for example their perception of country risk, the recent fall in the production of cotton seed and the reinvestment requirements because there is quite a heavy reinvestment requirement of $32 million.”
Mr Ndudzo said the IDC was now putting into action new strategies to lure other investors.
“We have to do something. When one plan fails we do not collapse. We have to move to plan B. It might not be the ideal one but we have to survive on that one.
“It might mean also a streamlined operation. It might mean our own rationalisation within the group and so forth but that is a plan B and we are still searching for somebody who may come but we have to package it to be more attractive again as a regional level package,” he said.
He said at present Olivine was operating at between 25 and 30 percent capacity utilisation.
Shortages of raw materials mainly soya beans and cotton seed, a liquidity crunch and stiff competition from imported products have affected the company’s viability over the years.
Olivine manufactures a wide range of consumer and industrial products such as vegetable oils, margarines, bakers’ fats, soaps, candles, dried beans and a wide range of canned foods. – New Ziana
Online Reporter