By Chipo Musoko, HARARE, July 17 (The Source) – Shareholders and creditors of the struggling manufacturing firm, Cairns Holding have voted in favour of its takeover by private equity firm, Takura Capital after approving its bid for the 63 percent shareholding previously held by the central bank.
The results of the vote, which was conducted on Wednesday, saves the company from liquidation and clears way for Takura to immediately invest $14 million which would be used to pay creditors, recapitalize the business and replace antiquated plant and machinery.
Cairns, whose debts amount to $25 million, was placed under provisional judicial management in 2012 and final judicial management in February 2013 due to insolvency. It voluntarily delisted from the bourse during the same year.
Previous attempts by South African firm, Vasari Global to take over the business failed due to regulatory and approval delays by the major shareholder, the Reserve Bank of Zimbabwe through its special vehicle, Fintrust which took two years.
In a statement the company’s judicial manager, Reggie Saruchera of Grant Thornton announced the results of the voting by creditors on Wednesday who passed all proposed resolution during a scheme meeting.
Saruchera said at the meeting that Takura was selected on March 16 after going to tender and approvals and other processes were completed in May.
According to the scheme, which now awaits the passage by the High Court, the first payment will be made within 30 days after its registration.
“Takura Capital will invest $7 million into the business on signing of the agreement and the other $7 million will be paid to the scheme participants,” said Saruchera on Wednesday.
He said the investor would immediately inject $2,7 million which will be supported by another and another $4,5 million to get the business running at full capacity.
“The purpose of this is to deal with the issues of high repair and maintenance costs and also the ability to increase our production capacity,” he said.
Saruchera said once an agreement had been signed, minority shareholders would receive $643,000 while the major shareholder, RBZ will get preference shares worth $1 million and the balance of $271,000 will be paid within 12 months.
He said preference creditors will get 12 percent of their debt and the balance will be converted into a debenture payable in five years at five percent interest in the case of the Zimbabwe Revenue Authority.
Workers will get 20 percent down payment and the balance of $1,8 million will be paid within five years.
Concurrent creditors such as FBC, IDBZ, Capital Bank and Agribank will get 30 percent and 45 percent preference shares while the balance will be paid in five years with a grace of six months in terms of interest.
Trade and other suppliers will get a 12,5 percent deposit and balance of $2,9 million payable in five years.
Previously, the company secured a $1,350 million loan from CABS under the distressed companies fund (DIMAF). It has repaid part of the loan, leaving a balance of less than $500,000.
The judicial manager disposed of the Charhons factory and realized $1,7 million of which $650,000 was paid to Stanbic Bank; $250,00 relocation costs; $400,000 was used to recapitalize the business and a dividend to creditors of $400,000 was paid.
When Saruchera took over the affairs of the company 2012 it had a turnover of $12,3 million and an operating loss of $4,4 million. Sales in 2013 went up to $15,3 million and $22 million in 2014.
Cairns has two subsidiaries, Cairns Foods Limited and EM Charhon. Cairns Foods has five SBUs – snacks, vegetables and fruits, groceries, Charhons and beverages.