By Chipo Musoko, HARARE, August 29 (The Source) – Cash-strapped conglomerate Starafricacorporation has secured buyers for its 33 percent stake in Tongaat Hulett Botswana and will soon sell its logistics business in a bid to offset its $20 million debt, the firm’s chairman has said.
The company recently agreed with creditors that it would not make payments for six months in order to dispose of assets worth about $10.4 million to retire debts.
Starafrica chairman, Joe Mutizwa, told the Source on Thursday after the company’s annual general meeting that a deal was about to be concluded but declined to disclose the price.
“Three potential buyers have expressed interest in Bluestar Logistics and we have a credible buyer for our stake in Tongaat Hulett,” he said, adding that the buyer was currently conducting a due diligence exercise on the asset.
Shareholders approved the disposal of the two assets during an extraordinary general meeting in July.
The company’s group chief executive Sam Mushiri told shareholders that the disposal of assets was “progressing well” and expected the deal to be concluded by October.
However, he said the trading environment remained tough as the group’s sugar unit Goldstar was struggling to compete with price-undercutting imports. He said the challenge of high manufacturing costs and obsolete equipment would soon be over after the completion of the upgrading of its sugar refinery in mid September.
Mushiri said 85 percent of the $5 million required to purchase a new plant had been secured, while civil works were underway at the refinery.
“The new plant will increase sugar production capacity from the current 450 tonnes to 600 tonnes per day,” Mashiri said, adding that the company would soon resume exports to Botswana and South Africa.
“After the upgrade we will be able to meet the requirements of all market segments and operate efficiently.”
Meanwhile, 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 the 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 was greater than that of its assets.