Govt's CAPS takeover stalls

HARARE - The government’s plans to take over the country’s largest pharmaceutical group, CAPS Holdings (CAPS), has hit a snag.

Industry minister, Mike Bimha, yesterday told a news conference in the capital that while he was hopeful the discussions would be concluded soon and amicably, the businessdaily is reliably informed that CAPS major shareholder, Frederick Mtanda, “is not a willing seller.”

“With CAPS, we have had issues that have taken a long time to be resolved, issues to do with the current shareholders of CAPS.Negotiations have taken place with the ministry and the Reserve Bank of Zimbabwe (RBZ),” he said.

“Every time we thought we had reached an agreement then goalposts are changed the next day, and this has really taken a lot of our time, but we believe that we will continue with discussions,” the minister said.

Bimha also said the company — which has since been delisted from the Zimbabwe Stock Exchange — was considered a worthy investment by government, despite the negotiation challenges currently being experienced in the transfer process.

“It was easy if CAPS was a company whose owners were willing to sell, but obviously when you have shareholders who were in the majority it is an issue that requires dialogue, it requires negotiations…

“But I am still hopeful that we will go around the challenges that are there and be able to finalise on this investment which I think is very important,” he said, presenting his year-end state of the industry address.

This comes as the Daily News earlier this month reported that the pharmaceutical group urgently required $6 million in recapitalisation, with the drug-maker currently operating at five percent of installed capacity.

Government assumed control of the struggling drug-maker in August after “buying out” Mtanda.  However, it seems several issues remain unresolved.

The company recently faced a critical funding shortfall, with its property escaping a public auction aimed at amortising a $4 million loan owed to two major banks — CBZ Bank and FBC Bank.

Through its special purpose vehicle aimed at housing bad loans — the Zimbabwe Asset Management Corporation — government assumed the pharmaceutical company’s debts to financial institutions.

CAPS is only operating one out of its four plants in the capital, Harare, as a result of lack of funding from new shareholders, government, leaving the country’s health institutions and donors with no option but to procure medicines, including intravenous drip water, outside the country.

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