adminThe scheme provides that lenders and creditors, owed by starafrica a total of US$19,7 million, would not be paid in the next six months to allow the company to work on its payment plan.
Otherwise, starafrica faced a bleak future amid reports that some of the creditors had started legal action against the company, which could have resulted in attachment of property or liquidation.
But the scheme of arrangement approved by the High Court and superintended by Retired Justice George Smith saw lenders and creditors endorse the plan by an overwhelming 93,94 percent.
Retired Justice Smith said the liquidity problems that rocked starafrica forced the firm to briefly suspend some of its operations as it also struggled to pay creditors. “starafrica faced liquidity problems and failed to pay creditors, which resulted in some unsecured creditors taking legal action,” he said.
When the result of the scheme of arrangement has been lodged with the High Court, starafrica would proceed to dispose of its 33,3 percent interest in Tongaat Hulett Botswana. It will also sell its shareholding in transport concern Blue Star Logistics. The total proceeds from the disposal of the two assets are expected to amount to between US$8,3 and US$10,4 million.
The disposal of assets would be executed within the period of the standstill arrangement and the proceeds would be used to partly settle creditors with the balance payable over 30 months. The balance would attract at least 12 percent annual interest.
“The scheme of arrangement meeting went well to today and we will now get the scheme of arrangement going,” was all starafrica corporation chief executive officer Dr Sam Mushiri said and promised a detailed statement today.
After six months from the date of sanction of the scheme of arrangement starafrica would use 70 percent of proceeds from its operations to retire liabilities to creditors and lenders.
It has made several other conditional arrangements to ensure that its strategy to retire the debts is not derailed by other factors including an extraordinary general meeting to be held in July to appraise shareholders and seek permission to dispose the stake in Tongaat Hulett and Blue Star.
The Zimbabwe Stock Exchange-listed firm would upgrade its sugar refinery plant to ensure the quality of its sugar required by its premium customers, bottlers, increases from 40 percent to 100 percent.
The 60 balance not good for bottlers is currently be sold to other industrial and domestic users.
The plant upgrade, to be undertaken by Indian company Casetech Consultants Limited and financially supported by the National Social Security Authority is planned for completion by March 31, 2014 and will result in more savings in terms of power, treatment chemicals and coal consumption.
Further, starafrica has reached an agreement with raw sugar suppliers Zimbabwe Sugar Sales that payment would only be made after the troubled firm has sold its refined sugar.
Sugar suppliers, secured lenders and unsecured creditors would receive regular updates on the execution of the scheme.
Online Reporter