BAT fails to remit $8m dividend

HARARE - Zimbabwe's largest cigarette manufacturer, British American Tobacco (BAT), is failing to pay over $8 million in dividend to its offshore major shareholder, due to foreign payment delays.

BAT finance director, Lucas Francisco, yesterday told the businessdaily that the cigarette manufacturer was presently in discussions with the shareholder mapping a way forward, while also engaging banks locally for the transaction to go through.

The cigarette maker’s major shareholder is British American Plc, which holds a 42,98 percent shareholding and over 8,8 million shares in the Zimbabwe Stock Exchange-listed counter.

“Basically, the final dividend for 2015 and the 2016 final dividend are outstanding. To date, I can say we are holding about $8 million that is yet to go through.

“We have been engaging, but despite the dividends being on the priority list the fact is there is no money. So, the little cash that the country is generating is used to prioritise the key inputs that are required for production,” Francisco said.

He also pointed out that the shareholder was “concerned” with the remittance situation given the unpredictability of the country’s cash situation.

Zimbabwe has been battling an acute cash shortage on the back of depleted nostro balances, leading to multi- national companies with shareholders outside the country failing to remit dividend to their respective shareholders.

While the country trades using a multi- currency system dominated by the United States Dollar, the greenback has disappeared from the market along with government’s surrogate currency — bond notes — introduced late last year to assault the cash shortages.

This has prompted fears as some offshore shareholders are now apprehensive.

Figures recently released by the central bank indicated that the apex bank had managed to reduce the country’s foreign payments backlog by more than 50 percent to the current level of $185 million that transactions.

However, most of these are just for raw material creditors and not dividend remittances for companies with offshore shareholders.

BAT managing director, Clara Mlambo, also pointed out that the company was failing to pay for its raw materials on the back of the foreign payment delays.

“We import about 90 percent of our packaging raw materials and given the present situation, payments to suppliers have been difficult,” she said, pointing out that while the company valued paying dividend to its shareholder, raw material payments also had priority in terms of how the group allocated foreign payments.

Meanwhile, Mlambo also pointed out that the group’s performance in the first quarter had remained flat as consumers battled cash shortages.

“The situation stabilised in December with the bond notes as the liquidity situation improved. However, the first quarter performance was flat largely due to the cash shortages, so that affected disposable incomes leaving performance largely flat,” she said.

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