The National Social Security Authority (NSSA) is targeting to release the approved US$18 million investment by March towards the revival of Cold Storage Company (CSC).
The development comes after Government ceded 80 percent of its shares to NSSA as part of efforts to resuscitate the firm and increase beef production for both domestic and export markets.
Acting NSSA chief executive officer Mr Barnabas Matongera told The Sunday Mail Business that the authority is ready to make CSC a force to reckon with in the country and region after clearing its debts and injecting a substantial capital to kick-start operations.
“Capital injection will be anticipated to begin in the first quarter of 2018 in line with the Government’s 100 days targeted based programme as well as per the investment process that will leverage on the diverse strategies to ensure CSC takes off on a viable note. The deal has progressed significantly and is now waiting sign-off by both parties.
“This will usher in a new era for CSC with two primary shareholders with diverse ideas that are aligned towards the revival of the company. However, the debt remains a part of the company being addressed by way of a scheme of arrangement, which enables fresh capital to be applied towards the operations for generation of new cash flows,” said Mr Matongera.
He said as part of the deal, NSSA will inherit some of the company’s debts to ensure that its transition is smooth.
Meanwhile, under the current draft scheme, US$14,3 million of the US$18 million is premised on a cash injection to restart operations, which includes purchase of feeder steers and feedlot costs (infrastructure were cattle are fed and fattened).
Another US$1,4 million will go towards repaying the debt owed to the Botswana government and the Botswana Meat Commission.
It is envisaged that US$2 million will be earmarked for initial overhead costs.
Further, sticky issues regarding the scheme of arrangement with creditors were finalised in October last year to start CSC operations.
CSC is a catalyst of the beef industry and is expected to bring fair pricing in the market. Its revival will definitely improve the economy in terms of exporting beef as it will unlock value in the livestock industry through job creation and foreign currency earnings.
CSC, at one time the largest meat processor in Africa, handled up to 150 000 tonnes of beef and associated by-products every year and exported to the European Union, where it had an annual quota of 9 100 tonnes of beef.
In its heyday, it used to earn Zimbabwe at least US$45 million annually. CSC is saddled with a debt of more than $25 million mainly as a result of fixed costs such as wages, rates and taxes on land. The CSC is in dispute with its creditors, mainly its 413 former workers, who are owed about US$4 million in salary arrears.
The company has for the past decade been making an annual loss of US$6 million. The firm is now operating at less than 10 percent of its capacity. Meanwhile, CSC accounted for about 6 percent of formal cattle slaughters during the third quarter of 2017.
Zimbabwe experienced a substantial dip in meat production during the third quarter of last year with a total of 197 457 cattle being slaughtered during that period, as compared to 215 499 during the corresponding 2016 quarter.
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