Russians eye Cairns

HARARE - A group of Russian investors led by tycoon Nikolay Varenko is reportedly keen on investing in loss-making Cairns Holdings Limited (Cairns), businessdaily can reveal.

This comes as the Zimbabwe Stock Exchange-listed group’s judicial manager Reggie Saruchera has said the company urgently needs $700 000 in working capital and to kick-start operations.

With the new deal reportedly initiated by Harare businessman Wicknell Chivayo, Moscow billionaire Nikolay Varenko’s Visor Holdings is aiming for a majority stake in the foods manufacturer.

“As much as Cairns is under judicial management… and has more liabilities than assets, we are busy with a thorough assessment of the company,” the known investment broker said, adding he was due for meetings with his superiors in America next month to “ensure that a consensus is reached”.

Chivayo, a presumed close ally of Varenko’s, said they were quite hopeful of Cairns’ prospects and were sure of a deal soon.

The development comes as Saruchera has told a creditors and shareholders’ meeting at the High Court that he was crafting a business rescue plan for potential investment in the business.

“Liquidation is not an option. Although a consortium of banks is putting up efforts on the provision of funds to get going, our main priority is to engage a reputable investor who is willing to come up with new and innovative ideas,” the Grant Thornton-Camelsa head said last week.

“We have already received an offer which is on my table, but l have not yet seen the ‘colour’ of their money as we are still to ascertain how much they can offer. As of next week, we will float a tender through the media so that interested parties can participate in the business rescue plan,” Saruchera said.

“Let me, however, hasten to say that if there is no turnaround and that you are willing to let the company wind up operations, we will come at the earliest convenience to liquidate,” he said.

Banks, which constitute nearly 65 percent of Cairns’ $11 million debts, were keen to work with any “serious investor” and negotiations were already underway to extend their short-term loans in order to secure working capital.

Last year, the company applied for voluntary judicial management after facing huge operational challenges and failing to raise $20 million in capital, but part of its operational challenges would be met through the disposal of ME Charhons —with proceeds being used to pay off some creditors.

Saruchera said they had decided to reduce the asking price of the biscuit-making subsidiary’s premises from $2 million to $1,5 million under a proposal where Stanbic Bank — who had attached the property to recover its money — provide nearly $1 million to resuscitate operations and secure its war.

The company, which is 63 percent-owned by Zimbabwe’s Reserve Bank, has since suspended trade in its shares on the local bourse after an $8,1 million loss to the 12 months ended August 2012.

Essentially, the company has struggled to survive due to competition from cheap imports and a lack of working capital, which has seen capacity utilisation remaining at a lowly 30 percent.

With an antiquated plant and machinery, shareholder funds have eroded to a staggering $4,6 million to the half year ended February — and which issues have resulted in the shutdown of its Bulawayo, Harare and Mutare plants.

However, the company remains hopeful of a stabilising economy and as it has concluded supply chain agreements with third parties in efforts to turn around its fortunes in the next reporting period. - Business Writer

Post a comment

Readers are kindly requested to refrain from using abusive, vulgar, racist, tribalistic, sexist, discriminatory and hurtful language when posting their comments on the Daily News website.
Those who transgress this civilised etiquette will be barred from contributing to our online discussions.
- Editor

Your email address will not be shared.