CSC seeks approval for strategic partner

CSC seeks approval for strategic partner
Published: 23 June 2015
Meat processor Cold Storage Company says it has secured an investor willing to inject $80 million into the company but Government is yet to approve its turnaround strategy which paves the way for the transaction to sail through as well as allow for the disposal of non-core assets that are weighing it down.

The struggling parastatal made a $1,4 million loss in the first quarter of the year while its debts have risen to $25 million in the last five years.

Addressing the Parliamentary Portfolio Committee on Lands, Agriculture, Mechanisation and Irrigation, CSC chief executive Mr Ngoni Chinogaramombe said while the company awaits approval for the strategy, Government has ordered a forensic audit into CSC.

"We have been negotiating with a few investors who are interested in coming to CSC but that is subject to approval from Government. There is one very keen prospective partner who wants to bring in $80 million once the plan is approved. They want to bring $40 million into Chinhoyi and another $40 million into the Bulawayo abattoir," he said.

He said if the turnaround plan is approved, it will also allow the company to dispose of assets that have been contributing to the huge debts mainly arising from fixed costs such as salaries, wages, rates and taxes.

CSC owns abattoirs in Bulawayo, Masvingo, Chinhoyi and Kadoma and several cattle ranches across the country. However, only two abattoirs are currently operational while the farms carry a herd of 8 533 animals of which 7741 are owned by tenants and CSC has only 792.

Mr Chinogaramombe said CSC can dispose of idle land on which the abattoirs are built and several employees' houses in towns where the abattoirs have been mothballed.

"We have a lot of land which we are supposed to pay taxes for but we are not using it. The abattoirs occupy just a quarter or so of the land and the rest is sitting idle. We are being charged rates on land we are never going to use. We have houses in Marondera, Chinhoyi and Kadoma that were occupied by employees when we were operating at full capacity, we can sell them and raise money. We are no longer running Marondera and Kadoma abattoirs and we can sell them and make money to reinvest into the company," he said.

He said the company can raise $14,5 million from the disposal of assets to give it a better negotiating position with investors in the future.

CSC has slaughtered only 5600 animals in the five months to May this year, which is only 5,8 percent of the total number of animals slaughtered in Zimbabwe during this period.

The firm was at one time the largest meat processor on the continent, handling up to 150 000 tonnes of beef and associated by-products a year and exporting to the European Union.

But poor management and persistent outbreaks of foot and mouth, which halted exports in 2001, have led to its failure.

Private abattoirs, some of which are hiring CSC facilities, have moved in to fill the void left by the parastatal in the domestic market.

The company has also entered into long term arrangements with large cattle producers who leasing some of its farms in Masvingo and Matabeleland South.
- BH24
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