Cairns crisis: Creditors meet

HARARE - Cairns Holdings (Cairns) creditors are expected to meet next month at the High Court to decide the fate of the company.

The company is currently under provisional judicial management.

Last year, the troubled food processor applied voluntarily for judicial management after facing huge operational problems that included an $11 million debt burden, with efforts to raise some $20 million fresh capital hitting a brickwall.

Reggie Saruchera of Grant Thornton Camelsa, who is the provisional judicial manager, said his organisation is currently reviewing the books and records in preparation for the first meeting with creditors and members.

The meeting will be held on February 13.

“The purpose of placing companies under judicial management is to allow the affected companies to be nursed back to financial health thus permitting them to resume trading as successful enterprises,” said Saruchera.

Cairns was suspended from the Zimbabwe Stock Exchange last December following the judicial management.
The company, whose last trading share price was 0,5cents, had lost 50 percent of its market capitalisation in 2012.

“If you are owed money by Cairns and its subsidiaries for any reason whatsoever, please contact our offices to collect proof of claim forms,” Saruchera said.

The Reserve Bank of Zimbabwe (RBZ), which held a 63 percent stake in Cairns through its investment unit Finance Trust of Zimbabwe, recently pulled out of the company.

Management had said the RBZ’s pull-out would help the group raise new capital.

Cairns recorded an operating loss of $771,638 in the six months to February 2012, nearly doubling the $486,805 loss posted over the same period last year.

The company said it was struggling to take advantage of the relative improvement in the country’s economy due to the lack of working capital.

Capacity utilisation has failed to rise beyond 30 percent with constant machine breakdowns compromising production, leaving the firm unable to compete against cheap imports from South Africa.

Plant and machinery had also become so antiquated that there was a $4,6 million erosion of shareholder funds over the half year to February.

Management blamed the poor performance on depressed volumes as well as non-activity at their subsidiary ME Charhons.

The crisis at the company has also resulted in its divisions in Bulawayo, Harare and Mutare being shut down. - Business Writer

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