admin
said.
Olivine, which is set to demerge from the listed conglomerate, AICO Africa Limited with 49 percent shareholding, has been operating below optimal levels and requires a huge fresh capital injection for recapitalisation.
While there is “another suitor” for Olivine, Willowton, which produces D’Lite and Sunfoil cooking oil brands which are popular on the local market, “has made considerable headway and the transaction can be sealed soon”.
“There are two serious investors, but Willowton has made significant moves . . . the deal can be sealed soon, most likely by the end of March,” said one source who requested anonymity for professional reasons.
There would be a dilution of the current shareholders with the new investor expected to inject capital for recapitalisation. Government, through the Industrial Development Corporation, holds 51 percent stake in Olivine.
Olivine managing director Mr Jonas Mushangwari said he would not comment on shareholder’s issues.
IDC spokesperson Mr Derick Sibanda said the transaction was being handled by its advisors “who are yet to advise them on the progress”.
Corporate Excellence and Imara Edwards Securities are the deal advisors.
No official comment could be obtained from AICO by the time of going to print.
Willowton Group, a family-owned business, is a major player in the cooking oil industry with various operations across the Southern African region.
It was formed in 1970, initially focusing on oilseed milling and refining, but later added margarine and spreads, beauty and laundry soaps, candles, baking fats and pasties in its product range.
Olivine, like several other local manufacturing companies, has suffered from the high cost of finance, intermittent machine breakdowns as the bulk of its equipment has outlived its lifespan.
The management said last year the company was buckling under pressure from low-priced imported products flooding the market. It added that the company was feeling the heat, especially over cooking oil and baked beans brands.
HJ Heinz, the US-based food company giant, sold its 49 percent shareholding to the Cotton Company of Zimbabwe in September 2007 in a deal worth close to US$7 million. Both Olivine and Cottco later became subsidiaries of AICO Africa which replaced the listing of Cottco.
The group is working on recapitalising the two firms before they list on the Zimbabwe Stock Exchange. Unlike Cottco, Olivine requires a huge capital injection before listing.
According to AICO, Olivine needs at least US$25 million for recapitalisation.
In 2010, AICO intended to raise US$50 million through a rights offer as the group wanted to retire debts of US$40 million and raise funds for Olivine.
The cash call was, however, blocked by some shareholders.
Online Reporter