CFI in talks over Agrifoods

Published: 10 April 2014

ZSE-listed CFI Holdings is in talks with a local private equity fund over a possible investment into its stock feeds unit, Agrifoods.

Well placed sources told The Herald Business that negotiations between CFI and the equity fund, Takura Ventures, are at an advanced stage. The equity deal will include fresh capital injection as well as credit supply of raw materials.

An indicative offer has already been received and the CFI board is evaluating options for moving forward in order to underpin the capital expenditure and working requirements for the business.

At the annual general meeting held last month, chief executive Mr Steve Kuipa said the group was currently in negotiations for an investment into Agrifoods Ltd with a local suitor.

Mr Kuipa also said there were three entities interested in the milling business Victoria Foods who are at various stages in their undertaking due diligences on the entity.

He said the group is positive that it may soon have a suitor for the business. The search for a new investor came after Johannesburg Stock Exchange-listed Grindrod Trading in February terminated talks with the group over the sale of a 49 percent stake in Victoria Foods.

Sources familiar with the transactions said although talks in Victoria Foods were ongoing there were not yet at the stage where they could be exciting to the market.

On capitalisation, Mr Kuipa said that the company remains committed to a capital raise at group level which will combine an appropriate mix of equity and debt.

"The group is evaluating a specific equity raise opportunity at this level combining a possible reorganisation of the group's portfolio whose net result would be to further streamline and focus the group towards its core competencies," he said.

In order to cut costs, the group has also restructured and rationalised its operations.

CFI, which has great potential as a top business performer continues to struggle particularly with regards to financing.

The inability so far to attract appropriate funding has hamstrung the company in re tooling its aged plant and equipment in the poultry business whilst depressing capacity and therefore efficiencies and margins across the business.

To its advantage is its huge asset base, which in turn makes it easier for the group to raise capital. The group plans to raise close to $3 million through the disposal of a property in the Retail Division valued at $1,2 million while plots and properties in the Poultry Division would raise $1,7 million.
- The Herald