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Takura will inject a total of $33 million over the agreed period

Business Reporter
CAIRNS Holdings could be taken out of judicial management by end of this month when all payments due to the company’s creditors and former shareholders are expected to have been completed.

Judicial manager Mr Reggie Saruchera said in an interview that new owner, Takura Capital, had injected part of the agreed initial fresh capital. Takura will inject a total of $33 million over the agreed period.

Takura Capital will assume the reins when all transfer formalities have been finished after it agreed to inject $33 million to acquire the Reserve Bank of Zimbabwe’s entire controlling stake in the group.

The private equity firm will also assume the fast moving consumer goods manufacturer’s catalogue of debts amounting to about $25 million.

Mr Saruchera said Cairns would soon be taken out of its lengthy judicial reconstruction programme as soon as the new investor has completed working capital and fresh capital injection into Cairns.

He said he is currently in the process of distributing funds injected to former shareholders and pre-judicial management creditors. The judicial manager said this process could be completed by end of this month.

The $33 million transaction price includes the purchase price for controlling interest in the fast moving consumer goods manufacturer, funds to finance operations and replace old machinery.

“As soon as we have finished (this process) we will apply (for lifting of judicial management. They have already done so. We are distributing it to various shareholders and creditors,” he said.

Takura Capital was expected to invest $7 million into Cairns on signing to take over the company and an additional $7 million to recovery scheme participants, as it steered clear of liquidation zone.

The private equity firm, which controls the country’s oldest bakery, Lobels, would also immediately invest $2,7 million and $4,5 million a while later in order to get the business running at full throttle.

Under the deal, Cairns’ minority shareholders will receive $643 000 while majority shareholder, RBZ, will get $1 million preference shares. Preference creditors will get 12 percent of amount owed while the balance will be paid over 5 years at 5 percent interest.

Workers would get 20 percent of money due to them with the balance of $1,8 million being paid over five years, in terms of the High Court approved scheme of arrangement to revive the company.

Mounting debts and working capital challenges had weighed down Cairns and efforts to revive the company, but the limited production after judicial management raised hope it could turn around.

Cairns has registered recovery in production to around 40 percent since 2010 when capacity utilisation fell to an all time low of about 10 percent.

Takura Capital piped at least four suitors, including Dairibord Holdings and Vasari Global to acquire the central bank’s majority stake in the formerly listed fast moving consumer goods company.