SOMETIME in December 2020, the Government moved to avert the liquidation of the Cold Storage Company (CSC) by placing it under a corporate rescue plan in terms of the Insolvency Act while facilitating its revival.
Corporate rescue, also known as business rescue or judicial management, provides temporary supervision of the company and of the management of its affairs, business and property. The model involves temporary moratorium (relief) on the rights of claimants or creditors against the company or in respect of property in its possession.
Despite its huge potential and glorious past, the Bulawayo-headquartered giant has been struggling to sustain profitable operations over the past years and faced the risk of liquidation as creditors demanded their dues, which ran into millions of United States dollars.
In the face of mounting debts and accusations of poor management and alleged corruption, among other factors, CSC slipped into insolvency, amid escalating risk profile, which made it difficult to attract fresh investment or working capital.
Now known as CSC-Boustead Beef Zimbabwe since 2019, following the coming on board of Boustead Beef (Pvt) Ltd, a United Kingdom investor who has committed to inject a minimum of US$130 million, the company is still struggling to restore normal operations with the main plant in Belmont, Bulawayo, remaining defunct.
While Boustead Beef investment was meant to unleash new life into CSC by reviving operations, refurbishing industrial assets such as ranches, feedlots and residential properties, stakeholders argue that progress is very slow.
Some have further questioned the capacity of the investor and suggested that the deal be reversed. Justifying the corporate rescue path, Lands, Agriculture, Water, Fisheries and Rural Development Minister, Dr Anxious Masuka, has said that it was difficult to viably implement the Boustead Beef deal as different creditors were threatening to attach CSC assets while former employees had reportedly destroyed critical documents. This saw Mr Ngoni Kudenga of BDO Zimbabwe Chartered Accountants being appointed as the first corporate rescue practitioner for the ailing giant beef processor.
His stint was, however, short-lived as creditors rejected him in April this year during a crunch meeting in Bulawayo, accusing him of being allegedly compromised.
Mr Kudenga was then replaced by prominent lawyer, Mr Vonani Majoko of Majoko and Majoko Legal practitioners.
Since then, legal proceedings have ensued over the matter. Majoko recently gave a detailed insight into what has really been happening at CSC.
Mr Majoko admitted that amid these complications, different stakeholders remain anxious as to what lies ahead of this strategic public entity and whether or not it will be resuscitated?
Opportunities lying ahead for CSC
Mr Majoko said he was convinced the State-owned entity could be transformed within a short time should pending legal and administrative hurdles be promptly sorted.
“US$130 million is too much as this does not require a lot of money. You don’t even need US$20 million,” said Mr Majoko. “CSC still has unique facilities both in terms of the design, capacity and geographical spread and no other local competitor has this.
“I’m referring to ranches, which are virtually in every province and have adequate holding capacity to feed CSC abattoirs that are found in Bulawayo, Masvingo, Chinhoyi and Kadoma as well as distribution depots in places like Harare and Gweru.”
Mr Majoko said the existing CSC infrastructure network remains fairly in good condition with the Bulawayo and Masvingo plants still maintaining the Europeanapproved standards.
“A big part of CSC is also in terms of the range of by-products like tallow for soap making, glue production and deboned meat, which can help Zimbabwe substitute on imports,” he said.
“It’s the capacity to export regionally and internationally that is awesome. As we speak there is appetite for a revived CSC to service new bigger markets like DRC, Angola and Libya etc, outside of the narrow scope of the traditional EU alone. We need to play along more on areas where we have comparative advantage and one of these is the cold chain side, which is not about meat but anything that requires bulk refrigeration. CSC should be able to tap into this and service other industries.”
Mr Majoko said business enquiries from local and international players were piling up as the market desires CSC presence.
How long should the market wait?
For Mr Majoko and his team, what is critical is the refurbishment and restoration of the cold storage facilities at the giant Bulawayo plant and not the feed stock.
“At this stage there is work being done to get the Bulawayo abattoir and cold storage facility functioning again,” he said. “The cold rooms are being refurbished and my understanding is that the compressors, which have not been working for the past 23 years, are now up.
“Only a condenser unit that has been shipped from China and other support materials to redo the facility are yet to be fixed, and take into account that there is about 80km of piping that needs to be attended to.
“Feedstock is not a challenge considering that we have about 5,1 million herd of cattle as a country and about 2,1 million are in Masvingo, and 2,2 million in Matabeleland provinces and CSC facilities are situated there.”
Prospects for working with the Botswana Meat Commission are also high and promising, he added. Regarding lost human capital Mr Majoko said there was sufficient knowledge and skill locally, adding that a revised CSC would create more opportunities for former workers and new graduates.
Impact of indigenous farmers
Following the successful land reform programme since 2000, there are a lot of successful indigenous farmers who have demonstrated capacity to produce good quality livestock, said Mr Majoko.
“Our engagements with them are very encouraging as well as with several local businesses that are keen to come on board in terms of stock feed supply and other inputs,” he said.
“These take into account climate change realities and areas where we need to climateproof CSC operations. Government is also doing a lot in terms of livestock development, borehole drilling and dam construction in communities, which will aid CSC revival.
“Our aim is not to push out our competitors but complement them and be partners where possible so as to provide wider and competitive service for others. Our infrastructure allows for such possibilities.”