HARARE, September 29 (The Source) – Perennial loss-making sugar manufacturer, StarAfrica Corporation has continued to default on payments to its creditors in terms of the company’s Scheme of Arrangement and is considering a debt-equity swap arrangement to restructure the company’s balance.
The company’s Scheme was sanctioned in August 2013 and was premised on the company disposing of its transport unit Blue Star Logistics and its 33 percent stake in Tongaat Hulett Botswana as well as on increased volumes of sugar from its Gold Star sugar plant in Harare.
To date only Blue Star Logistics was disposed this year resulting in the company failing to settle with its creditors.
Chairman Joe Mtizwa told the company’s shareholders at an annual general meeting that part of the balance sheet restructuring also involves debt to equity conversion, among other options.
“As a result, a Circular to Shareholders is being worked on with a view to holding an Extraordinary General Meeting (EGM) of shareholders in the second week of November 2016 to approve the proposed restructuring,” he said.
StarAfrica has continued to report significant losses in the last six years. It recorded a net loss of $10,2 million for the year ended March 2016. As at the date, its current liabilities exceeded assets by $62,7 million.
Meanwhile, in a trading update for the five months to August 2016, chief executive Regis Mutyiri said tonnes of sugar sold were 300 percent above the comparative period last year.
Sugar production at the sugar plant is now at 400 tonnes per day and the company is targeting 600 tonnes per day upon commissioning targeted for November this year.
Currently, sales are 80 percent in favour of industrial sales with the balance in retail. Due to the company’s indebtedness, the Harare sugar plant is subjected to frequent water disruptions by the City of Harare.
Mutyiri said in order to regain lost market share, the company will continue to review prices of sugar supplied to industrial customers in line with prevailing conditions in the market.