Art restructures debt

HARARE - Distressed paper and stationery maker Art Corporation Limited (Art) is pursuing options to restructure and reduce its $8,4 million debt.

“The initiatives include working with our bankers to restructure the current short-term debt into long-term, and reduction in cost of debt,” said the group’s chairperson Passmore Matupire yesterday, adding that they were also continuing with initiatives to find appropriate funding and technology partners for the business.

He said that the group was also engaged in discussions with other financiers for the funding of capital projects.

Meanwhile, Art’s revenue marginally declined in the year to September 2013, going down to $33,7 million from $34,1 million.

During the period under review, profit stood at $399 000 down from $433 000 recorded in prior comparable period.

Borrowings declined to $8,4 million down from $9,6 million as a result of cash generated from non-core asset disposals and internal cash generations.

Matupire said demand for the group’s products throughout the operations was constrained by the poor liquidity in the economy as well as the intense competition emanating from imports.

The tissue business was the most affected. Art is the holding company of a manufacturing group of businesses in Zimbabwe with distribution operations in Malawi, Zambia, Zimbabwe and South Africa.

Its batteries unit, Chloride Zimbabwe, achieved a turn-over of $20,3 million during the period under review, which was a 1,14 percent decrease from the prior year.

“The business unit experienced volume decline in the second half of the year as a result of tight liquidity conditions as well as competition from imported brands. Consequently market prices were reduced in order to activate demand,” said Matupire.

Art used to be one of the largest industrial companies in Zimbabwe involved in paper manufacturing, paper converting and distribution, pen manufacturing and lead-acid battery manufacturing and distribution.

It employed over 1 800 people prior to dollarisation. It closed its Mutare Board and Paper Mill some two years ago after it became costly to operate due to antiquated machinery as well as huge electricity costs.

The profitability of the unit had been affected by the fact that newsprint prices were controlled by government during the crisis decade to 2008.

Matupire said Mutare Board and Paper Mill remain listed for disposal but the process has been affected by the poor liquidity position in the economy.

“The board however remains committed to the disposal,” he said.

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