Sale of Dairibord Malawi unit hits snag

percent stake in Dairibord Malawi. It is in the process of selling the assets of Mulanje Peak Foods, a fruit and vegetable canning company.
Presenting a trade update for the first quarter of the current financial year, DZHL chief executive Mr Anthony Mandiwanza said the disposal of Mulanje Peak Foods’ assets was an ongoing process.
Mr Mandiwanza said they had identified buyers interested in the assets and they were carrying out due diligence, but pointed out the investors were struggling to raise funding for deposits.
“The disposal of Mulanje is ongoing,” he said. “We identified potential investors who want to buy the plant. Management is carrying out due diligence.
“However, the consortium was having problems to raise the required deposit. All I can say is that work is in progress.”
Dairibord Malawi Limited managing director Ms Theodora Nyamandi recently said that production at the subsidiary company stopped last year and that the assets were being held for sale.
“We stopped production at Mulanje Peak Foods at the close of the year (2011) due to the harsh economic environment (in Malawi). The assets are being held for sale,” said Ms Nyamandi.
Both Mr Mandiwanza and Ms Nyamandi declined to disclose the price at which the assets were being sold, neither would they reveal the identity of the investors interested in acquiring the assets.
But despite difficulties faced at Mulanje Peak Foods Dairibord said it would continue to invest in the country. “We will continue seeking opportunities in areas that give us growth,” said Ms Nyamandi.
DZHL recently increased its shareholding in Dairibord Malawi by 8,4 percent to 68,4 percent. The pullout from Mulanje Peak Foods was due to stunted growth and profitability constraints.
“The group resolved to dispose of Mulanje Peak Foods, a 100 percent subsidiary of Dairibord Malawi Limited, due to difficulty in realising real                       growth and profitability,” said chairman Mr Tim Chiganze.
During the first three months of the year, the group turned over US$24 million, a 19 percent positive variance, compared with the same period the previous io year. Volumes also increased by 13 percent with raw milk increasing 8 percent compared with the same period last year. In terms of revenue, milk products contributed 34 percent compared with 37 percent recorded during the comparable period.
Zimbabwe Stock Exchange-listed Dairibord Holdings Limited registered a pre-tax profit increase to US$10 million in 2011 from US$8 million during the prior comparative period.