The Sunday Mail
THE Reserve Bank of Zimbabwe has realised US$16 million from divesting its interest in Tractive Power Holdings Limited (TPHL) and Astra Holdings,
and is battling to offload holdings in six other companies, raising fears that it might ultimately fail to get full value from its investments.
Monetary authorities announced their intention to sell off shares in Astra Holdings, TPHL, Tuli Coal, Transload, Cairns Holdings, Homelink, Carslone and Sirtech Limited in May 2011 in line with the RBZ Act (Chapter 22:15), which requires the central bank to dispose of assets not related to its core functions.
Homelink has been taken off the market as it is viewed as strategically important to the operations of the apex bank. All the companies were owned through an RBZ investment arm, Finance Trust of Zimbabwe. RBZ Governor Dr John Mangudya said last week the disposals were an on-going process.
Successful transactions
To date, the RBZ’s 58,75 percent stake in TPHL and its 63,96 percent holding in Astra Holdings have been successfully sold. TPHL, whose US$10 million sale was completed in January 2013, managed to find a suitor in Zimplow, which has a similar line of business.
Before that transaction, Zimplow already held a 47 percent stake in the business, making it convenient for two entities to complete the transaction through a share swap. Zimplow acquired the remaining 66 296 418 shares by issuing 191,78 new Zimplow ordinary shares for every 100 TPHL ordinary shares already held. The transaction represented a major business coup for the acquiring business, which used to specialise in the manufacture of animal-drawn implements through its flagship division, Mealie Brand.
In essence, TPHL sells a broad range of engine-drawn machinery and vehicles through its special divisions Barzem, which sells mining and construction equipment; Farmec, an entity that retails agricultural equipment and Puzey & Payne, which imports vehicle brands such as Mazda, Mitsubishi and Forland.
A year later, on August 15, 2013, the RBZ exited Astra Holdings when some 88,5 million shares, representing the RBZ’s 63,25 percent interest in the company, were taken up by a Hamister — a consortium made up Astra management and staff and a foreign investor — at a price of 6,2 cents in a block deal on the Zimbabwe Stock Exchange.
The deal was valued at US$6 million.
Indigenous investors control 51 percent of the investment vehicle, while Tokyo Stock Exchange-listed Japanese firm Kansai Plascon, through Kansai Plascon Africa Limited, hold the remainder.
Just like Astra, the suitor Kansai Plascon specialises in the decorative, protective and performance coatings.
Cairns Holdings
But while disposal of shares in the two companies was smooth, courting suitable investors for the five other entities is still proving difficult five four years after being put on the market. No company highlights the difficulty in wooing investment than Cairns Holdings.
Though there have been several expressions of interest for the apex bank’s 63,3 percent stake, nothing tangible has come through. The food and beverages company has been linked to Dairibord, Judah Holdings and South African firm, Eastern Trading Company Limited. Recently, Vasari Group of South Africa emerged as the front-runner but again nothing materialised.
Cairns Holdings, the parent company of Cairns Foods and ME Charhon Pvt Limited, was suspended from ZSE trading on December 4, 2012 after it applied for provisional judicial management.
The company is under judicial management, with Mr Reggie Saruchera of Grant Thornton Camelsa overseeing its administration. Efforts have been made to dress up the business to make it attractive, with investments in equipment via a US$1 million loan accessed through the Distressed and Marginalised Areas Fund (Dimaf), a Government-Old Mutual facility for troubled companies. Cairns seems to be on the mend.
The company reported turnover and profit in the year to March 31, 2014 rose to $22,1 million and US$2,2 million, respectively. However, a US$10 million debt for a business that is valued between US$20 million and US$30 million remains a major drawback.
Tuli Coal Mine
It has also been a similar story for Beitbridge-based Tuli Coal.
Although tenders for a due diligence exercise of the junior miner closed on May 14, 2013, the exact value of the business remains unknown. But the RBZ has been receiving offers since 2011. Reports suggest that Singaporean billionaire Sukamto Sia made a US$40 million bid, as did minorities in the coal business led by Kamba Trust.
Transload
There have been no public reports of expressions of interest in Transload, a joint venture with Yuon Woo Investments of South Korea. Transload owns the bio-diesel plant in Mount Hampden, which, despite its glamorous launch in 2007, never really took off. Market watchers believe there is inherent potential in the business due to the global shift towards renewable energy.
Carslone
The RBZ used Carslone Private Limited to invest in mining. In 2007, the company took over control of Golden Kopje Mine on the Chinhoyi greenbelt in south-eastern Zimbabwe at a cost of US$ 16 million.
Not much is known of its other investments, nor the progress that has been registered in selling it.
The same can be said for Sirtech Limited, a company that is into manufacturing, scientific research and industrial development.
The RBZ holds a 65 percent stake in the entity. On the overall, the share sales were envisaged to generate US$137 million that was supposed to be used in amortising part of the RBZ’s US$1,3 billion – a debt that Government has since adopted.
Former RBZ Governor Dr Gideon Gono recently claimed that US$1 billion could be raised from selling non-core assets.
RBZ chief Dr John Mangudya said last week: “Disposing of assets is work in progress we will furnish you with figure once all is done.”
In a letter of intent and technical memorandum of understanding dated July 1, 2014 signed off by Finance Minister Patrick Chinamasa and Dr Mangudya, and addressed to IMF managing director Ms Christine Lagarde, Government indicated that the transfer of liabilities to central Government would help minimise financial sector risks.
“In recognition of the importance of a strong central bank to financial stability, the RBZ Debt Assumption Bill was submitted to Parliament in April 2014.
It provides for the restructuring of the RBZ balance sheet by transferring its non-core domestic and foreign liabilities total ling US$1,35 billion to the central government.
“In this regard, the (Finance Ministry) issued in late March and in April 2014, securities to repay US$146 million of the validated RBZ’s liabilities. In implementing the debt assumption process, the Government of Zimbabwe is guided by a strategy to minimise potential fiscal risks and to avoid the concentration of maturities.”
By shearing off the huge debts from the central bank’s balance sheet, Government is trying to make it attractive to financiers.
Efforts are being made to capitalise the RBZ so that it can ably play its role as lender of last resort.
The debts were accumulated from critical national programmes such as agriculture support; maize imports; medicine; supporting elections; and reviving parastatals, State enterprises, Government ministries, agencies and departments at a time when Zimbabwe was under siege from North America and the European Union bloc.
