|Cairns seeks US$20m for working capital|
|Thursday, 21 June 2012 12:00|
CAIRNS Holdings is seeking US$20 million for working capital, debt payment and plant refurbishment, chief executive Mr Silas Gweshe has said. “To fully recapitalise operations, the company requires US$20 million to fund working capital, purchase and refurbish plant and machinery and partly pay the outstanding debt,” said Mr Gweshe in an interview yesterday.
“The debt reduction exercise will assist in restructuring the group’s balance sheet.”
Cairns, manufacturers of a wide range of food products, snacks and beverages, currently has a US$12 million debt.
The group remains operational at about 20 percent capacity. Operations are constrained by working capital shortages. The snacks and groceries divisions, which are based in Harare’s Ardbennie industrial area, are running at reduced throughput.
Volumes for the beverages, vegetables and fruit division in Marondera and Mutare remain depressed.
ME Charhon operations are also subdued. Cairns now owns 100 percent of the sweet and confectionery firm after Dairibord sold its 40 percent stake.
The Bulawayo-based pasta plant was mothballed due to inefficient technology.
Once capital is secured, the company revenues are projected to grow by more that US$36 million next year and about US$48 million in 2014.
Capacity utilisation would expand to 75 percent, enabling the company to meet local and export demand. The company forecast revenue for this year to be around US$20 million.
While the group was operating at breakeven, the cost of debt remained a burden.
Mr Gweshe said the group continued to face competition from imports, especially from South Africa, despite concerns over the quality of some imported products. But the levying of import duty on certain products has helped in curbing the high import activity, said Mr Gweshe.
Cairns’ biggest assets remain in leading brands such as Chompkins, Cashel Valley and Sun Jam. These are very popular among Zimbabwean consumers, although inconsistent supply and quality have seen this eroded since dollarisation.
“The group’s key product lines have a market niche with brands still commanding a high demand,” said Mr Gweshe.
Finance Trust, an investment vehicle owned by the Reserve Bank of Zimbabwe, owns 64 percent of the group and plans are at an advanced stage to dispose the equity.