Starafrica converts $46m debt into equity

HARARE - Sugar producer Starafricacorporation has converted more than $46 million of its debt into equity as a way of cleaning the company’s balance sheet.

This was after creditors saw it fit to convert their debt into ordinary shares in the struggling sugar company.

“The aforementioned debt-to-equity conversion will result in 4 195 063 188 Starafrica ordinary shares, representing 89 percent of the post-conversion issued share capital of the company, being issued to the concerned Secondary Scheme Creditors and these shares will be introduced for listing on the Zimbabwe Stock Exchange before the end of April 2018,” Starafrica company secretary Aldo Musemburi said.

He further indicated that the principal amount of the debt converted to date represents approximately 70 percent of the principal amount of the Secondary Scheme Debt.

“The benefits of the conversion will be the reduction of the interest which would have been payable on the principal amount of the Secondary Scheme debt,” he said.

After conversion of the debt, the Zimbabwe Asset Management Company is now the majority shareholder in Starafrica with a 58,54 percent stake followed by the National Social Security Authority, 31,63 percent, and  Old Mutual Life Assurance Company Of Zimbabwe, 1,18 percent among others.

The latest development comes as the sugar producer narrowed its losses by 59,71 percent to $1,34 million in the half year ended September 30, 2017 on the back of changes to its operational strategy that saw improved revenues.

In the same period last year, the company registered a loss of $3,33 million.

Revenue for the period under review improved by 62,48 percent to $23,16 million from $14,25 million registered in the same period last year.

This was on the back of the group’s sugar sales, in terms of volumes, increasing by 70 percent to 30 238 tonnes from 17 740 in prior year over the comparative period.

Starafricacorporation chairperson, Joe Mutizwa said the earnings before interest, tax, depreciation and amortisation (EBITDA) amounted to $1,9 million, which was better than the $1,6 million achieved in the whole of 2016.

“The strong performance is on the back of continued optimisation of post upgrade efficiencies, improvements in quality and quantity, cost containment strategies and positive effects of working capital accessed as part of the secondary scheme,” he said.

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