Starafrica struggles to offload subsidiaries

HARARE - Hard-pressed Starafrica Corporation (Starafrica) is struggling to find buyers for its Tongaat Hulett Botswana (Tongaat) stake and transport subsidiary Bluestar Logistics.

The group was ordered by the High Court in August last year, under a scheme of arrangement, to dispose the investments within six months.

Proceeds from the sale were to be channelled towards settling debts amounting to approximately $20 million.

Aldo Musemburi, the group’s company secretary, said liquidity constraints and the harsh economic environment was hampering efforts to dispose the two units.

“Earlier efforts to dispose of Tongaat Hulett Botswana and Bluestar Logistics… have not yielded the intended results as the prospective purchasers failed to raise the funds thereof,” he said, adding that fresh efforts were being made to engage other prospective buyers.

“Two prospective purchasers are carrying out due diligence and Scheme Members will be advised of progress in the next update.

“It must be pointed out that while there is interest on the local market for this asset, the liquidity crunch obtaining in the economy is militating against an expeditious disposal thereof,” he said.

He said the group’s 33 percent Tongaat stake “is a good asset, whose disposal must yield maximum value, hence the need to allow due process in respect of its disposal”.

Last year, Starafrica shareholders approved a scheme of arrangement entailing a cocktail of measures meant to turn around the group’s fortunes.

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

The six-month moratorium was anticipated to allow the group 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 company was facing a bleak future, with some of creditors taking legal action. The scheme is also expected to see the company upgrading its Harare sugar refinery.

Starafrica’s major shareholders include the National Social Security Authority (18 percent), ZSR Investments UK (14 percent) and Old Mutual (10,7 percent). — Business Live

Comments (3)

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Pumps. - 9 June 2014

This Company is a good Company which has only run down by over indebtness at a time when assets are not getting the vaue they are worth of. It only requires a debt for equity swap and things would be sourted ot subject of Shareholders could agree. It is a Company which is Coca Cola Certified subject of upgrading the plant and it also can deliver best Sugar Quality to Delta Breweries and to Schweppes Ltd.. Minorities are many there and the reputation of the ZSE is very depend on the use of minorities. Nobody has to be is greedy now, it needs some time and a bit of willigness to match the future. This Company is worth much more than it's current market valuation suggests, however the problem is bridge financing now. I wished I could inhject 5 million their so that things could improve more quick. Sugar is a needed item and Sugar Prices will raise on International Markets pretty soon because of much demand and inflation.

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