Govt completes CAPS takeover

Source: Govt completes CAPS takeover – DailyNews Live

Ndakaziva Majaka      10 April 2017

HARARE – Industry minister Mike Bimha says government has completed the
takeover of the country’s largest pharmaceutical manufacturer, CAPS
Holdings (CAPS), which collapsed five years ago, in a bid to revive its
operations.

At its peak, CAPS accounted for 75 percent of the local healthcare
products market and was involved in the manufacture, wholesale
distribution, and retail of pharmaceutical, consumer, and veterinary
products.

At the time of its closure due to undercapitalisation, huge debt and
allegations of mismanagement, CAPS was under the control of key
shareholder and chairperson, Fred Mtandah.

“We believe for now that the Reserve Bank of Zimbabwe has completed the
discussions with CAPS and that the central bank is holding onto government
interests,” he told the businessdaily.

“The idea is that we must try to enhance the value of CAPS before we can
ultimately invite investors and there are so many of them,” he added.

Mtandah, who has previously hinted at government involvement in CAPS,
confirmed the latest development.

“Yes, the acquisition actually went through in January. But I cannot
disclose more,” Mtanda said from Europe over a telephone interview.

This comes as Zimbabwe’s pharmaceutical industry has experienced a massive
decline, with an estimated 90 percent of all pharmaceutical products being
donor-funded and imported.

CAPS has ceased manufacturing drugs and failed to have its 15-year lease
of Harare’s upmarket St Anne’s Hospital renewed in 2013, while its QV
pharmacy chain has only recently returned to good health under judicial
management.

The pharmaceutical group urgently requires $6 million in recapitalisation
funds, with the drug-maker currently operating at five percent of
installed capacity.

Government assumed control of the struggling drug-maker in August 2016
after buying out Mtandah, however, the acquisition took longer than
expected as the parties resolved outstanding issues.

CAPS recently faced a critical funding shortfall, with its property
escaping a public auction aimed at amortising a $4 million loan owed to
two major banks – CBZ Bank and FBC Bank.

Through its special purpose vehicle aimed at housing bad loans – the
Zimbabwe Asset Management Corporation – government recently assumed the
pharmaceutical company’s debts to financial institutions.

CAPS is only operating one out of its four plants in the capital, Harare,
as a result of lack of funding from new shareholders, government, leaving
the country’s health institutions and donors with no option but to procure
medicines, including intravenous drip water, outside the country.