ZAMCO to take over $32m starafrica debt
Enacy Mapakame Business Reporter—
SUGAR processor starafricacorporation Limited’s shareholders yesterday approved a scheme of arrangement in which the company’s $32 million debt owed to different financial institutions will be taken over by the Zimbabwe Asset Management Company.At an extraordinary general meeting held in the capital yesterday, shareholders approved all the ten resolutions that were on the agenda seeking to convert debt to equity as part of restructuring the company’s balance sheet.
The perennial loss making company defaulted on paying its creditors in terms of its scheme of arrangement.
Of the $32 million debt, BancABC was owed $16 million while Afreximbank was owed $11 million. The other lenders are the Infrastructure Development Bank, Stanbic Bank Zambia and the now defunct Kingdom each owed $1,8 million, $0,6 million and $2,6 million respectively.
“The ZAMCO Scheme is entered into with ZAMCO, on the understanding that ZAMCO has separately or will soon acquire the agreement of each of the lenders, to cede and assign their loans to the company, to ZAMCO,” said starafrica.
The shareholders also approved the National Social Security Authority and the Zimbabwe Sugar Sales schemes. As at March 2016, starafrica owed $10 million to the ZSS and $10 million to NSSA, which was for the plant upgrade.
At starafrica’s request, NSSA agreed to provide further funding of $1,5 million working capital.
“It has also been agreed that the $10 million will be combined with the $1,5 million funding into new convertible consolidated loan,” said starafrica.
Management at starafrica said this gave the company a fresh breath with a clean balance sheet and prospects were high for the sugar refiner.
In August 2013, starafrica concluded a scheme with its creditors and suppliers, which was sanctioned by the High Court and registered with the Registrar of Companies.
This Initial Scheme was put in place due to the severe working capital and solvency constraints faced by the company on the back of declining yields and lower quality of refined sugar from the Harare sugar refining plant which required significant upgrade.
Additionally, the company faced high competition from imports and a balance sheet burdened with the debt of liquidated subsidiary companies that starafrica had guaranteed.
According to its financials, starafrica has over the last six years been reporting significant losses.
As at full year to March 2016, the sugar processor reported a net loss of $10,2 million with current liabilities exceeding assets by $62 million.