High Court approves Cairns reconstruction plan, firm gets $30mln investment

High Court approves Cairns reconstruction plan, firm gets $30mln investment

By Chipo Musoko, HARARE, June 16 (The Source) – Foods manufacturer Cairns Holdings has been given a nod by the High Court to enter into a scheme of arrangement with its creditors after securing from an unidentified investor to inject $30 million into the troubled business.

At the beginning of this year, an official familiar with developments at the firm told The Source that five new investors had expressed interest in investing in the company after another potential investor, Vasari Global of South Africa, failed to commit.

Last August, Cairns was close to reaching an agreement with Vasari Global which reportedly wanted to acquire the central bank’s 67 percent stake in the company and assume its $25 million debt but failed to reach an agreement.

In the past, Dairibord Holdings, Judah Holdings Limited, Eastern Trading Company Limited of South Africa, a consortium of Russian investors and lately Takura Capital have reportedly expressed interest in acquiring a stake in the company.

A source familiar with the developments confirmed on Tuesday that the company had secured an investor to inject $30 million but declined to give further details saying doing so would jeopardise sensitive negotiations.

“The purpose of the scheme is to negotiate terms with creditors, it’s a compromise settlement,” the source said.

On Monday, the judicial manager, Reggie Saruchera of Grant and Thornton announced in a statement that an order was granted by the High Court on June 3 for creditors to meet on July 15 under the chairmanship of Andrew Mugandiwa.

“For the purpose of considering and, if deemed fit, agreeing, with or without modification to a Scheme of Arrangement between the company and the scheme members and creditors,” read the statement.

Saruchera declined to comment on the matter saying that details would be discussed at the meeting.

In 2013, the company, which has been under judicial management  for the past two years accessed $1 million bailout under the Distressed and Marginalised Areas Fund (Dimaf), a joint government and Old Mutual facility for troubled companies but said it requires a further $8 million to get on the path to full recovery.

It used the funds to acquire new machinery for snacks production.

Established in 1947, Cairns is one of the country’s oldest food manufacturing companies. Its fortunes took a nosedive after adoption of multi-currencies in 2009, forcing it to apply for judicial management and delisting from the Zimbabwe Stock Exchange.