Nssa ups stake in Starafrica

Source: Nssa ups stake in Starafrica – DailyNews Live

BUSINESS WRITER      28 August 2017

HARARE – Statutory pension fund, National Social Security Authority
(Nssa), is set to increase its shareholding in Starafricacorporation
(Starafrica).

This was after the sugar producer said it wants to offer Nssa 1 533 333
333 ordinary shares with a nominal value of $0,0001 each at a conversion
price of $0,0075 per share in respect of a loan of  $11 500 000.

The deep-pocketed pension administrator, which already holds 30,8 percent
shareholding in Starafrica, has been a life-line to the sugar producer
since 2012, when it lent the struggling firm $7 million to refurbish its
Harare refinery.

Starafrica company secretary, Aldo Musemburi said the conversion price in
relation to $10 million of the loan will increase by 10 percent for each
year that interest is paid or accrued, up until the time of conversion,
while the conversion price applicable to $1,5 million of the loan – which
is new funding, shall be $0,0075.

“The new funding in the form of a loan of $1 500 000 shall be subject to a
claw-back from the company’s shareholders who may wish to reduce the
impact of dilution resulting from the potential conversion of the loan of
$1 500 000 into equity,” he said.

Musemburi further added that shareholders, who will meet on September 29
to deliberate the scheme, shall have an option to claw back their
proportionate entitlement of the new funding loan from Nssa within a
period of 90 days from the date that this resolution is passed.

Starafrica, which owes significant amounts to several banks, including
BancABC, Afreximbank and the Infrastructure Bank of Zimbabwe, has been
struggling with legacy debt and last year had to approach the Zimbabwe
Asset Management Company (Zamco), to clean its balance sheet in a
debt-equity swap deal.

Zamco – an investment vehicle created by the Zimbabwe Reserve Bank in 2014
to mop up bad loans in the banking sector – now holds 48 percent
shareholding in Starafrica.

Established in 1935 solely as a sugar refiner, Starafrica, which traded as
ZSR Corporation until it changed its name in 2006, was part of Tate & Lyle
until 2002, when the global sugar giant divested and sold majority control
to local management and workers.

Starafrica recorded a 75 percent increase in turnover to $32,6 million in
the year to March 2017 compared with $18,7 million recorded in prior year.

The group also achieved its first positive earnings before interest, tax,
depreciation and amortisation (EBITDA) since the adoption of the
multi-currencies in 2009.

EBITDA amounted to $1,6 million before factoring in once-off restructuring
costs totalling $4,6 million.

Starafrica incurred a post-tax loss of $5,9 million in the period under
review against a loss of $10,2 million suffered in 2016 due to high
financing costs.