SUGAR processor starafricacorporation says it is now in a position to commence repayments to its creditors before the year closes barely a week after its creditors demanded that the company be liquidated because it is failing to pay them their dues that US$19,7 million.
In a communication to shareholders, StarAfrica said improved performance at its Harare sugar refinery plant since its upgrade has capacitated the firm to pay its debts. “The Plant Upgrade at Goldstar Sugars Harare is in the final phase of commissioning, with quality product already being supplied to the market. Consequent thereof, the Board of Directors of starafricacorporation Limited resolved that dividends from the Company’sinvestments be applied towards settling Scheme Creditors, pending their disposal as specified in the Scheme of Arrangement,”said the company in a statement.
“The Company expects to receive dividends in December 2014 and is pleased to advise Scheme Creditors that an amount of around, but not less than, one hundred thousand United States Dollars ($100 000) will be paid out to Scheme Creditors on or before 31 December 2014 in part settlement of debts owed to them at the time of the Scheme. The payments will be made pro rata to the amounts owed.”
After a meeting on 21 October, starafrica creditors are said have demanded liquidation of the company following an unsuccessful scheme of arrangement. “They (creditors) did not mince their words. It appeared they had laid out plan when they got into the meeting demanding that he firm be liquidated as they felt they was not progress as far as recapitalsing the company was concerned,” an insider said.
starafrica corporation shareholders last year in July approved a scheme of arrangement that entails a cocktail of measures meant to turn around the ground fortunes. Seventy-two percent of proxies, presenting 372 million shares, who participated in the company’s extraordinary general meeting.
After the AGM starafrica announced that it would dispose its transport company and its stake in Tongaat Hulett Botswana for US$6 million to offset part of the company’s US$19,7 million debt. The company then agreed with creditors and lenders that it would not make payments for six months in order to dispose of assets worth about US$10,4 million to retire debts.
The balance from the US$19,7 million owed to creditors and lenders would then be paid over a period of 36 months for unsecured lenders and creditors and 18 months for the secured lenders and creditors of the troubled company. After the meeting the company is said to have engaged “potential investor” to address the creditors concerns. This resulted to the company releasing a cautionary statement advising shareholders to trade with caution when dealing with the company’s shares.
“The directors of starafricacorporation Limited (“the Company”) wish to notify all shareholders that the Company is involved in discussions that may lead to transactions which may have a material impact on its share price. Shareholders are advised to act cautiously when dealing in the Company’s shares,” read the cautionary statement.
At the company’s Annual General Meeting on 29 September this year, starafrica said it had achieved three of its four key deliverables aimed at restoring production and is currently operating at 40 percent, targeting full capacity upon completion of the new plant commissioning.
Chief executive Sam Mushiri said the company expects full production of 600 tonnes a day in the 2015 /16 period after completion of plant upgrade exercise at the Gold Star Harare plant. Starafrica, which reported a US$12,2 million loss for the year to March 31, 2014, has also been confronted by cashflow problems that have forced its board and management to redefine the business.
The bloodbath at starafrica, which had reported a US$16,4 million loss last year, put under the spotlight the choice for conglomerates as business models in Zimbabwe, where TN Holdings Limited has crumbled, while former Zimbabwe Stock Exchange blue chip, TA Holdings, has recently been finding it tough to spring out of the red line.
A US$35 million working capital black hole has cracked through the starafrica balance sheet, after current liabilities remained high during the review period, as current assets crashed. The deficit stood at US$30,6 million during the prior comparative period in 2013. The company had a combined US$35,4 million in current and non-current loans and borrowings during the period. Current liabilities, the short-term dues that starafrica owed to stakeholders, stood at US$36,5 million during the full-year to March 31, 2014, with current assets closing at US$1,5 million, which translated into a negative US$35 million working capital.
Total liabilities exceeded assets by a massive US$23,2 million during the period, placing its going concern status into question, and its ability to ride over deadly headwinds triggered by a contracting economy into doubt. The financial results means the group whose interests span from logistics, sugar refinery, chemicals, food processing and properties, also lacked funding to lubricate its day to day functions as executive management and directors have failed to stem the hemorrhage.
from: http://www.financialgazette.co.zw/starafrica-to-settle-debts/
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