CFI secures $10m for rehab

CFI secures $10m for rehab
Published: 19 September 2017
CFI Holdings' divisions, Agrifoods and Victoria Foods, may soon resume production after judicial manager Mr Reggie Saruchera secured $10 million from a local bank for plant rehabilitation and working capital needs.

Mr Saruchera of Grant Thornton told our Harare Bureau in an interview that they were in the process of making sure that the milling plants for Victoria Foods and Agrifoods, currently under care and maintenance, were cleaned up in preparation for resumption of production.

"We are readying up to start operations and are in the process of cleaning up the plants and doing test runs in preparation for production. We will gradually increase production," Mr Saruchera said.

Each of the operations would receive a $5 million injection to allow production to  resume.

Mr Saruchera said Agrifoods required $7 million while $10 million is needed to bring Victoria Foods to optimal production.

Mr Saruchera said a specialist for Victoria Foods Milling plant would be flown into the country to assist with setting up the plant ahead of resumption of operations, put into judicial management in August last year.

He said the $10 million facility secured from a local financial institution would run for a period of 3 to 5 years at an interest rate of less than 10 percent per annum, but would not reveal the name of the bank.

This comes as National Social Security Authority chairman Robin Vela said NSSA would soon call for a rights issue to raise funding required to recapitalise the group, especially suspended operations at the two divisions.

Mr Vela said lack of funding was part of the reasons the entire CFI group was not performing well, further claiming that some of the major shareholders in the agro-industrial group did not want to inject capital.

Grant Thornton recently said it was in the process of finalising a supplier agreement with a company that expressed interest supplying the grain. The agreement was said to be in final stages around March this year.

Agrifoods revenue is expected to reach $27 million, with gross profit of $4.9 million in the first year of judicial management.

Agrifoods and Agrimix, another CFI Holdings division, reportedly owe creditors $10 million.

CFI Holdings' turnover in the five months to February 2017, was 24 percent up on prior year, at $22.6 million compared to $18.1 million, largely due to improved performance by entities outside judicial management.

Acting group chief executive Timoth Nyika recently said the group recorded a profit of just above break-even compared to a loss of $4 million during the same period last year.

He also said resumption of operations at Agrifoods and Victoria Foods was key to the recovery of group performance towards year end.

According to Mr Nyika, Agrifoods Harare was expected to commence operations in April 2017 while the Victoria Foods was scheduled to resuming production by July 2017, but missed the timeline.

Agrifoods revenue stood at $3.3 million in July this year and has been declining in the prior years due to non-payment for supplies and inadequate working capital.

Other CFI group operations include Farm and City, Town and Country, Glenara Estates and Crest Poultry Group.
- online
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