Premier Tobacco faces collapse

via Premier Tobacco faces collapse – NewsDay Zimbabwe February 11, 2015

Premier Tobacco Auction Floors faces imminent collapse amid revelations that the company is drowning in debt after failing to meet statutory obligations.

The imminent collapse comes as the Tobacco Industry and Marketing Board (TIMB) meets tomorrow to deliberate on the state of the sector and issue out new licences for the 2015 selling season. The TIMB board, chaired by Monica Chinamasa, will also deliberate on the date for the commencement of the selling season.

There are now fears that Premier may collapse during the selling season leaving farmers who have delivered their crops in a lurch, a situation similar to the demise of Millennium Tobacco Auction Floors.
Millennium did not register for the 2013 selling season.

But Premier managing director Philemon Mangena said the auction floor would not go under.

“The auction floor will operate, we have submitted our application to TIMB and we understand that it is in the final stages of approval. As an auction floor, we don’t buy tobacco. Tobacco is bought by tobacco merchants. We only provide a facility for buyers and sellers to meet,” he said yesterday.

Impeccable sources within Premier told NewsDay yesterday that management had been spending on luxury cars and using money that it was not entitled to.

This has left the auctioneer owing a local bank about $400 000 and over $1 million in tobacco levies to the statutory bodies—TIMB, Tobacco Research Board (TRB) and the Zimbabwe Revenue Authority (Zimra).

The statutory levies owed to TIMB are money that was deducted from growers, but was not forwarded to TIMB. This has serious implications on TIMB’s ability to render adequate service to farmers who would have paid for this service, industry experts say.

Growers pay Government Levy which is used to fund the operations of TIMB and TRB. Funding these two institutions is very critical for the viability of the ordinary grower. A better capacitated TRB would mean more research into tobacco varieties, especially with the shifting seasons that have left vulnerable growers with no capital for irrigation poorer.

Tobacco Levy is paid by buyers and it is supposed to be remitted to Zimra. This levy is not coming from Premier coffers, but from buyers.
Mangena acknowledged his company’s indebtedness to a local bank and statutory bodies, saying the debts would be extinguished.

“The debt with a local bank is our normal working capital facility which is secured by our assets and we do not have problems with the local bank. The facility will be paid off by the end of the season.

We have been working with this bank for the past three years and we will continue to work with them going forward. Our relationship with the bank is excellent and next to none. They have supported us from inception and they have given commitment to work with us this year,” Mangena said yesterday.

“Outstanding amounts to statutory bodies have also been secured by immovable assets and the debts will be extinguished by September 2015.”

TIMB chief executive officer Andrew Matibiri said he would not comment referring all questions to the board “which is meeting on Thursday [tomorrow] to consider various issues”.

Last year, NewsDay reported that Premier Tobacco Auction Floors and it’s sister companies Megalink (Pvt) Ltd and Front Comm (Pvt) Ltd had prejudiced the State of $6,7 million in unpaid taxes.

This came after two Zimra officials were brought before the courts for soliciting for a $40 000 and a Range Rover vehicle as bribe to lower the tax bill from $1,5 million the duo had raised. Further investigations unearthed that the tax bill was $6 764 868,77.