Four banks stuck in struggling Lobels

By Shane Makoshori

At least four banks that took control of bread-maker, Lobel’s in September 2012 after pouring US$4,5 million to recapitalise the then ailing business are failing to find buyers to take over the business, the Financial Gazette reports.

Lobel’s is one of the country’s largest and oldest confectionary foods producers. The consortium of banks that bailed out Lobel’s were FBC Bank, CBZ Bank, NMB Bank, Metbank and Capital Bank. The banks had been heavily exposed to Lobel’s at the time of the transaction. Capital Bank has since shut down after running into its own problems.

The last minute decision to take over Lobel’s two years ago came after the five financial institutions battled to recover loans extended to the business, a situation that placed them under tremendous pressure to lay out a plan that would revive the business, other than selling off its assets and shutting it down.

They then formed Altiwave, an investment vehicle that took over almost 100 percent shareholding in Lobel’s and appointed seasoned industry executive, Ngoni Mazango, to spearhead a plan that would see the firm return to stability.

Mazango immediately embarked on an aggressive equipment purchasing programme as he sought to replace Lobel’s antiquated machinery. The Altiwave arrangement was expected to be just a stop gap measure while the banks scouted for competent investors.

But over two years after the transaction was sealed no suitors have been found, although talk of a takeover has been doing the rounds on the market.

“We are still in Lobel’s,” said CBZ Holdings chief executive officer (CEO), Never Nyemudzo. He spoke to the Financial Gazette as rumours of an imminent takeover deal swirled on the market. “We are yet to find a buyer,” Nyemudzo said.

When asked to comment on the rumours, Mazango said this had not yet been brought to his attention. “This has not been communicated to me,” he said.

CBZ Bank, a unit of the Zimbabwe Stock Exchange-listed CBZ Holdings Limited, had the largest exposure to Lobel’s. Apparently, banking institutions have been anxious to offload non-core assets. Last year, FBC Holdings indicated that it would be divesting from plumbing materials manufacturer, Turnall Holdings Limited, were it ended up with a significant shareholding after the firm failed to service a debt.

But in a cash-strapped market were existing businesses have been folding due to a worsening economic crisis, finding a suitor was always going to be difficult. The liquidity crunch in the economy has meant that very few, if any, local investors have the wherewithal to capitalise companies.

Lobel’s had failed to attract investors when banks stopped extending working capital and announced they were scouting for new investors in 2011.

Lobel’s was owned by Ceuvost Services, a consortium comprising former FBC Holdings Limited CEO Livingstone Gwata, Herbert Nkala, CAPS Holdings chairperson, Freddy Mtanda and David Chiweza, a retired soldier.

The four held about 25 percent shareholding each in the company. Previous proprietors, the Lobel family, sold the bread-making business to the Nkala-led consortium just after the new millennium, but they retained the biscuit-making unit.

The biscuits business under the Lobel family has remained viable, and exports throughout the region and increasingly, abroad.

Its bread-making counterpart had floundered under black ownership, with acute cash flow problems, compounded by gross financial mismanagement and inefficiencies as well as ageing plant and equipment lurching it from one crisis to another.

With the intervention of the banks, it turned the corner. Unfortunately, banks are now failing to find the exit due to that company’s past. Financial Gazette