Starafrica losses balloon

HARARE - Listed diversified group Starafrica Corporation Limited (Starafrica)’s losses ballooned to $5,2 million in the half year to September 2013 from $4,8 million incurred in prior comparable period.

The group has been trading in the red for the past four years.

Its chairperson, Joe Mutizwa, said the company was upgrading its Gold Star Sugar Harare (GSSH) plant ? the major cause of its perennial losses ? which is expected to be commissioned in April next year.

“Considerable progress has been made on the plant upgrade project at GSSH,” he said.

“Seventy percent of the equipment has been manufactured and inspected by Societe Generale de Surveillance, a leading global inspection, verification, testing and certification services provider,” Mutizwa said.

The Zimbabwe Stock Exchange-listed firm said shipment of the plant equipment began on December 11 this year from India and is expected in the country by January while the remaining lot is to be shipped by February, 2014.

The initiative is aimed at halting Starafrica’s loss-making streak due to old and inefficient equipment at the company’s sugar refinery.

“The group’s performance is not expected to improve until the plant upgrade at GSSH is completed and the plant is operational,” said Mutizwa.

The upgraded plant will increase production capacity from the current 300 tonnes per day to 600 tonnes per day.

This will also result in improved sugar yield, quality and operational efficiencies, in addition to bringing the latest sugar refining technology and international standards at the plant.

Mutizwa noted that GSSH will be able to consistently satisfy refined sugar requirements for all domestic market segments and have a surplus for export.

As a result of viability challenges Starafrica could not meet its financial obligations, prompting creditors and financiers to contemplate attaching the troubled firm’s assets. To prevent this, directors of the company proposed a scheme of arrangement overwhelmingly endorsed by lenders and creditors at a creditors’ meeting held in Harare on June 5 this year.

The scheme was sanctioned by the High Court on August 7, 2013 and was registered with the Registrar of Companies a week later.

The scheme provides a six months moratorium on all debts. Part of the scheme of arrangement was the proposed disposal of Starafrica’s 33 percent investment in Tongaat Hulett Botswana and Blue Star Logistics, which were all carried at the company’s extraordinary general meeting held on July 19.

The six-month moratorium would allow Starafrica time to sell some of its assets to partially settle liabilities immediately thereafter while the balance would be staggered over 32 months.

Revenue in the six months declined from $17,4 million in 2012 to $6,9 million. The group did not declare an interim dividend.

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