By Conrad Mwanawashe
There are growing fears that CFI Holdings, once a blue chip counter on the Zimbabwe Stock Exchange may lose mills at subsidiaries AgriFoods and Victoria Foods, amid mounting debts at $55 million and an urgent demand for recapitalisation.
The fears are based on mounting pressure on the judicial manager for AgriFoods and Victoria Foods, to act, possibly by way of disposing of some assets and get funds to pay creditors.
Losing the mill spells death for CFI, according to director Hamish Rudland, majority shareholder in Zimre Holdings.
Zimre Holdings and the National Social Security Authority teamed up to form Stalap Investments to wrestle control of CFI from Nicholas Van Hoogstraten.
“This company (CFI) was worth $300 million in 1999 and we want to build it back to that level. Discounted in this market it’s worth $20-$25 million,” said Rudland.
Disposing off the mills is clearly not an option for Stalap but the worry is on the other shareholder, Van Hoogstraten.
CFI requires at least $30 million recapitalisation over the next five years, according to director Mr Hamish Rudland but shareholder bickering has taken centre stage ahead of emphasis on a turnaround strategy to boost performance and profitability.
While the internal strife rages between the two camps, one including Zimre Holdings and the National Social Security Authority combined in Stalap Investments and another camp with British tycoon Nicholas Van Hoogstraten, CFI has sunk low into debt.
CFI has a retail network Farm and City, a Fast Moving Consumer Goods brand, a farming brand under Glenara Estates that can feed into the mills.
“The synergies and concept of ground to plate and if you look at successful agri-industrial businesses- the successful ones are those that offer the customer all the way through and that’s what CFI can do.
“Unfortunately we are not at the moment exploiting that potential because of the shareholders standoff,” said Rudland.
For this reason, Rudland vowed that the rights issue to raise $12 million, the first phase of a capital raising exercise and resisted by Van Hoogstraten, will go ahead despite the British tycoon’s protestations.
“Van Hoogstraten doesn’t want to put money that is why he is fighting the rights issue. And it has been like that for the past two years. So because of that we will just bulldoze through and raise the capital and the company must start to work.
“As soon as the circular to shareholders is through the stock exchange we are pushing it through straight. We are not interested in hearing any other stories now.
“If Van Hoogstraten refuses to go for a rights issue, we will meet him on the dance flow at the EGM and we will explain to the shareholders why the company needs money. For the last two years we have been talking about recapitalising this business and its time up.
“If we don’t recapitalise this business now we can basically wash it down the sink. The rights issue has to go ahead.
“We have a lot of support; everyone wants to see the company moving. Everyone wants the same thing except one guy who’s holding everyone to ransom because he’s playing some little game. He wants sell off its assets and strip it and we yet want to invest and build it,” he added.
While the fight for control is raging, Stalap has committed to rebuilding the group and is working on modalities for capital raising.
The agricultural division headlined by Glenara Estates has been ‘adequately capitalised’ and is in full production with 600 hectares of maize having just been harvested.
“We should be doing 300 hectares of potatoes this year. We are going to go into cattle. We are gearing up for the rain season coming we going to put in maize and soya so there is going to be big production this year,” said Rudland. Furthermore, the environmental chicken houses will be fire up this year.
At Agrifoods, a $5 million facility has been organised and the company is expected to be in production in the next six weeks to two months. Rudland said that another subsidiary, Victoria Foods will be resuscitated in about two months.
“It looks like we have secured a deal on that. It’s a third-party deal but unfortunately I cannot reveal who it is at the moment. But it has been consummated, signed and it’s basically ready to roll. And it’s a purely financing deal with an off-taker agreement for its entire production and this sorts out our working capital issues,” the CFI director said.
As soon as Victoria Foods is going the next stop would be work on the snack foods line and Fast Moving Consumer Goods basket.
“At the moment we have got consultants looking at the mills, making sure that they are up to standard in terms of productivity, efficiencies and so that we will be competitive to produce quality products always associated with Victoria Foods,” he said.
There is a working capital gap of about $2 million at Farm & City, but the company needs about $5 million worth of stock.
This will help to increase margins as the company will not be reliant on supplier credit. There are plans to redevelop Farm & City into a new concept store that services especially the agriculture sector from proceeds of the rights issue.
“We are looking at a diversified agricultural hardware outfit that can offer the customers good service, good diversity of products and a one stop shop for that, where they can get their veterinary, general hardware and their farming inputs. And the will be one in the future where they can sell their farming products,” the director said.
Farm & City has 42 branches in every major centres around the country located in the central business district.
“Some of them are worn down but the infrastructure is there, solid and well built. The shops need a redesign and this will be in the concept store. We will run one concept store and will roll them out on a phased implementation over the next two three years. Farm & City has huge potential especially if Agrifoods comes on line, because it is a huge outlet for stockfeed.” The Herald