Starafrica to dispose assets for $6 million to clear debt

By Chipo Musoko
Harare, July 19 (The Source) – Cash-strapped StarAfrica Corporation is set to dispose its transport company and its stake in Tongaat Hulett Botswana for $6 million to offset part of the company’s $19.7 million debt.
The company’s acting chairman, Rungamo Mbire told The Source after an extraordinary general meeting on Friday that the sale would be concluded before end of August.
“We got a floor price of $4 million for our Tongaat Hulett stake and $2 million for Bluestar Logistics,” he said.
He declined to disclose the buyers citing confidentiality but revealed that negotiations with one of the buyers were at an advanced stage.
“We expect the sale to go through in August or before end of August,” he said.
Starafrica owns a 33.3 percent stake in Tongaat Hulett Botswana.
Shareholders approved the disposal of the two assets during the EGM.
The company suffered a $16.4 million loss for the year to March 31, 2013 while the group’s revenue plunged from $53 million last year to $24 million in comparative period this year.
Its liabilities outweighed assets by $10.4 million as at March 31, 2013 and current liabilities exceeded current assets by $22.2 million, making the company technically insolvent as the value of its liabilities were greater than that of its assets.
The company recently agreed with creditors and lenders that it would not make payments for six months in order to dispose of assets worth about $10.4 million to retire debts.
The balance from the $19.7 million owed to creditors and lenders would then be paid over a period of 36 months for unsecured lenders and creditors and 18 months for the secured lenders and creditors of the troubled company.
Retired Justice Smith, who chaired a scheme of arrangement meeting with lenders and creditors, agreed to stay payments for six months, the decision was taken when some creditors wanted to sue the company and attach its property.
The company’s operations have been weighed down by serious working capital constraints, old equipment and competition from often lower priced imported sugar.