Source: Govt confirms CAPS debt assumption – DailyNews Live
BUSINESS WRITER 26 April 2017
HARARE – Finance minister Patrick Chinamasa says government has assumed
pharmaceutical manufacturer, CAPS Holdings (CAPS)’s, legacy debt.
Despite growing calls for government to stop warehousing State
enterprises’ debt, Chinamasa said Treasury was moving to honour the ailing
firm’s debts through Treasury Bills (TBs), in a move aimed at making the
company attractive to investors.
“Government has also made a conscious decision to resuscitate CAPS
Holdings and Cottco through warehousing their (these companies’) legacy
debt under the Zimbabwe
Asset Management Company (Zamco) before government fully takes up its
equity,” Chinamasa said in a ministerial statement on TB issuance.
This comes as Industry minister Mike Bimha recently announced that
government had completed the CAPS acquisition, which collapsed five years
ago.
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, with the former shareholder
also confirming the acquisition.
CAPS joins other organisations that have been bailed out by government
through debt assumption like the central bank.
However, analysts have pointed out that debt assumption at the various
State enterprises is only cleaning balance sheets and not internal
processes that led to the initial chaos.
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.
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