adminentities.
The group has concluded the sale of West Bev, its beverages manufacturing unit and is targeting to raise an additional US$10 million from the remaining assets.
The group decided to shed off West Bev after intense competition and inadequate funding adversely affected the unit.
Delta Beverages, whose massive recapitalisation over the past two years has seen it reclaiming over 90 percent of the market, dominates the beverages market. Starafrica chief executive, Mr Pattison Sithole said proceeds from the disposal would go towards retiring the expensive debt and financing new capital projects.
“We have concluded the disposal of our beverage business West Bev. We have so far realised about US$11, 7 million,” said Mr Sithole.
The Zimbabwe Stock Exchange listed firm is restructuring to focus on sugar refining, packaging and logistics as the core of the business.
At the end of this month, the group completes the disposal of wholesale business, Redstar. Redstar was struggling due to competition, debt and heavy losses due to thin margins.
It failed to raise funding for recapitalisation and was largely dependent on the group.
Two other operations, Marathon Tyres and Arthur Garden Engineering are also going under the hammer. The two entities have not made significant contribution to the group’s financial position and it was clear the group was going to do away with these entities.
During the group’s Annual General Meeting held recently, shareholders also agreed to dispose of company assets amounting to about US$800 000. Mr Sithole said the cash injection in the sugar refining business would boost the group’s capacity utilisation to above 60 percent.
He added that the group will continue with its restructuring and dispose operations, which are not critical and remain with the core business of the group.
Starafrica last year managed to raise US$20 million through a rights issue and convertible debentures. The group allocated US$11 million towards debt restructuring, US$5 million for working capital and the remainder went towards retooling and operations.
Starafrica key business units include Gold Star Sugars, a sugar manufacturer, Country Choice Foods, which makes caster sugar, icing sugar and syrups. Other business operations include property company Silver Star Properties, logistics firm Bluestar Logistics, packaging firms Highfield Bag and Ployfilm Plastics.
In the first quarter of the year Gold Star Sugar’s production increased 53 percent compared to the previous period.
Turnover for the group amounted to US$21,3 million up from US$16 million realised in the comparable period.
Starafrica is expected to return to profitability by full year 2013.
Online Reporter