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Banks are set to acquire about 10 percent of Cairns

Golden Sibanda Senior Business Reporter
Banks have agreed on a debt to equity swap with foods and beverage processor Cairns Holdings investor Vasari Global in what will significantly cut its net shareholding when the deal is finalised.
Sources told The Herald Business that the financial institutions were on course to acquire a minimum of 10 percent equity in the company. Initially, Vasari was poised to acquire 67 percent shareholding.

A number of local financial institutions that have agreed on the debt to equity in exchange are owed, cumulatively, about $11 million. Cairns owes creditors and suppliers in excess of $30 million.

“Negotiations have taken longer than expected because of negotiations between Vasari Global and the creditors of the company.
“Banks have agreed to take about 10 percent stake in Cairns,” said a source who commented on condition that they were not named.

Finer details of the agreement remain a closely guarded secret, but Vasari Global has lately been in discussions with creditors and shareholders of Cairns since its successful bid to take over the firm.

Among the contentious issues that have delayed the finalisation of discussions and injection of fresh capital are differences over the purchase consideration Vasari was expected to pay.

The South African investor allegedly had misgivings about the $30 million that the group was expected to part with for the shareholding while it would also have to settle liabilities to creditors.

Cairns Holdings judicial manager Mr Reggie Saruchera confirmed discussions were ongoing with all creditors, but declined to shed details fearing doing so could jeopardise the talks.

The options available, the judicial manager said, included among others, debt-to-equity swap and the rescheduling of major loans.
The group owes creditors $20 million with about $11 million to lenders.

The prospective South African investor was short-listed as the preferred candidate to acquire the Reserve Bank Zimbabwe’s 67 percent shareholding in the food processing company.