CFI sells major Victoria Foods stake

Published: 03 July 2013

Fast-moving consumer goods giant, CFI Holdings, is selling 49% of its shareholding in Victoria Foods to South Africa's JSE-listed Grindrod Trading Limited for $3,2 million, as international corporations renew interest on Zimbabwean assets.

In an abridged circular to shareholders published in Harare recently, CFI said it would dilute its 100% shareholding in Victoria Foods - one of Zimbabwe's largest milling companies - through the issuance of 812,841 Victoria Foods (Pvt) Limited ordinary shares to Grindrod. This would convert into 49% of the "enlarged" issued share capital of the milling company.

In the circular, which is seeking shareholder approval for the transaction, CFI says the proposed deal would include the recapitalisation of Victoria Foods through a consideration of $3 250 000 and the provision of a $2, 75 million shareholder loan.

The group says it will re-structure $2 862 245 of its intergroup loan owed by Victoria Foods into a shareholder loan. As a result, CFI shareholding in Victoria Foods will be diluted to 51%, just meeting the minimum requirements stipulated under the indigenisation directives.

CFI says the injection of fresh capital and the reduction of debt, through the transaction, would have an immediate positive impact on its financial performance and revenue generation.

Meanwhile, the group also announced that it faces potential liabilities to employee benefits from former workers who crossed over to Upridge Trading, which operated the supermarket chain Afrofoods. According to CFI, Afrofoods abrogated on an agreement to absorb CFI Retail employees that was part of the franchise agreement with the group. Afrofoods has since been liquidated.

It is also in the courts fighting an application by Dominion Trading to have Victoria Foods liquidated over an outstanding credit payment of $6 million, which it is disputing.

On a positive note, CFI says litigation was in progress to recover $460 000 plus interest and costs it is owed by a former customer, Superbake Bakeries.
- businessday