Cairns plans debt, equity swap deal

HARARE - Cairns Holding Limited (Cairns) plans a debt to equity swap deal as part of strategies to rescue the financially troubled food processor.

If implemented, the transaction could see banks — including NMB and Stanbic — becoming major shareholders in Cairns.

Cairns, the manufacturer of once popular Willards snacks, is saddled by an $11 million debt — 65 percent of which is owed to banks.

“We want the restructuring and re-organisation of the group by negotiating debt to equity swap arrangements and organising appropriate loans facilities and where necessary encumber the assets of the group,” said the firm’s judicial manager Reggie Saruchera of Grant Thornton.

The debt equity deal is among other revival schemes approved by Cairns’ stakeholders and creditors a fortnight ago.

The company is also considering bringing in a new investor.

This comes as a group of Russian investors led by tycoon Nikolay Varenko is reportedly keen on investing in the loss-making firm.

Saruchera recently pointed out that the company urgently needed $700 000 in working capital and to kick-start operations.

With the new deal reportedly initiated by Harare businessperson Wicknell Chivayo, Moscow billionaire 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.

Saruchera said that liquidation was not an option and efforts we being put to conclude settlement arrangements with creditors.

Although a consortium of banks is putting up efforts on the provision of funds to get going, Saruchera added that the main priority is to engage a reputable investor who is willing to come up with new and innovative ideas.

“We have already received an offer which is on my table, but I have not yet seen the ‘colour’ of their money as we are still to ascertain how much they can offer,” 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.

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. - Kudzai Chawafambira

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