Starafrica divests from Tongaat

HARARE - StarafricaCorporation Limited (Starafrica)’s shareholders have approved the group’s plan to dispose of its 33,3 percent stake in Tongaat Hulett (Tongaat) Botswana as part of strategies to raise capital.

The financially troubled group will also off load its entire shareholding in transport subsidiary Blue Logistics with both transactions expected to rake in at least $10 million.

Starafrica plans to channel the proceeds towards paying off its nearly $20 million debt, among other competing needs.

The transactions are part of a scheme of arrangement unanimously approved at the group’s extra ordinary meeting held last Friday.

This comes as the group, once Zimbabwe’s largest sugar producer, had its operations weighed down by serious working capital constraints, old equipment and competition from lower-priced imports.

Starafrica was deemed technically insolvent as the company’s total liabilities exceeded assets by $10,4 million and current liabilities exceeded current assets by $22,2 million.

Although its lenders and creditors recently approved an arrangement to give the company time to sort out its arrears reduction strategy, its overdue debt remains the biggest undoing on the company’s fortunes.

The company’s lenders and creditors recently approved a scheme of arrangement to give the sugar processor time to sort out its plan to the overdue liabilities.

The scheme provides that lenders and creditors would not be paid for months to allow the company to work on its payment plan.

The six-month cessation will allow Starafrica to sell some of its assets to partially settle liabilities immediately thereafter while the balance would be staggered over 32 months depending on the nature of liability.

The group plans to upgrade its Harare sugar refinery to enhance operational efficiencies and volumes.

The upgrade would increase the company’s production capacity from the current 300 000 tonnes per day to 600 000 tonnes per day.

Comments (2)

I am not sure how logical it is to sell assets to pay of debts. But my main point of correction is on production figures 300 000 tonnes to 600 000 tonnes a day about 10 000 rail wagons a day. I think it is an error on figures it must be 300 to 600 tonnes a day.

Sugar Tech Agent - 23 July 2013

This company is going under ,it is highly leveraged and has been selling strategic assets even before dollarisation. It is only operating in a survival mode which lacks real strategies.

Gaba - 25 July 2013

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