Source: US$18m CSC, Nssa bailout faces collapse – The Zimbabwe Independent April 20, 2018
THE US$18 million deal between the Cold Storage Company (CSC) and the National Social Security Authority (Nssa) to resuscitate operations at the former top meat exporter faces stillbirth owing to government’s red tape and competing interests, the Zimbabwe Independent has learnt.
By Nkululeko Sibanda
At the attainment of independence in 1980, CSC was one of Zimbabwe’s major foreign currency earners, as it exported thousands of tons of beef to the European Union (EU).
The CSC requires an injection of US$45 million, apart from US$33 million required to retire its debt.
Officials at the company this week revealed the Nssa deal was on the brink of collapse, as authorities at the Agriculture ministry are not keen on finalising it.
Nssa, which falls under the Labour ministry, had pledged to inject US$18 million into the coffers of the ailing parastatal in a bid to get it back on its feet.
A top CSC board member told the Independent this week had it not been for the red tape, the resuscitation programme would have been rolled out in July last year. Agriculture ministry officials are resisting the deal on the grounds that it would advantage Nssa, which they do not have control over.
The officials want CSC to partner a foreign investor so that the ministry continues to have influence in the parastatal.
“Last year, we were at a point where we had a scheme of arrangement with all creditors which was concluded in May. That should have cleared for the revival of the company’s operations. The deal was premised on funding from Nssa which government had negotiated,” said the source.
The scheme of arrangement, the source said, would have enabled the parastatal to ring fence its assets from being attached in the event creditors opted for property attachment in order to recover what they are owed.
This, the source said, would enable investors to come through with new money for the parastatal.
“That was not implemented. The turnaround was supposed to start in July last year and it did not because there were delays, first, with the registration of that scheme of arrangement. And when it was registered, there were delays with the release of the money from Nssa,” an official said.
“After the scheme’s registration issues were sorted, it turned out that Nssa was ready to disburse the money only for the government to start asking a lot of questions around the deal.”
Part of the problem of the deal, the Independent understands, emanated from the fact that Agriculture ministry officials felt left out of the transaction as the deal was crafted in cabinet, without their input.
“Remember the deal had been etched out in cabinet. The people at the ministry (of agriculture) started saying that since Nssa fell under a different ministry, CSC’s inking a deal with them (Nssa) would draw the focus to Nssa and give it an unnecessary advantage, leaving CSC, which falls under the Agriculture ministry, as a lesser stakeholder in the deal. So they could not sign the agreements and Nssa, on its part, would not release the money,” the source said.
Problems, it is said, worsened following the November 15, 2017 developments when former president Robert Mugabe was deposed.
“On November 15, there was a change in government and a host of other changes. Even at the Ministry of agriculture, there appeared to be a change in the way the officials there were seeing this whole thing. They then started talking about opening this deal to new investors,” the official said..
“The scheme of arrangement has not started. There were commitments made to creditors based on the money from Nssa. The days are ticking and creditors are still counting down and looking forward to payment from CSC.”
Nssa in May last year rejected a 12-member CSC board which was appointed by government in April, saying it would only inject new money into the company once the board had been dissolved and a new, inspiring line-up put in place. Most of the board members were related, in one way or the other, to Zanu PF and government bigwigs.
Nssa acting general manager Emerson Mungwariri in emailed responses in October last year said the authority was in the process of finalising the business plan that will determine how the board would be structured.
Mungwariri said before pumping in money there was need for an endorsement of the creditors’ scheme of arrangement by the Master of the High Court as well as conducting a due diligence and valuation exercise on the company.
In an interview with this paper in January this year, former Nssa general manager Elizabeth Chitiga said: “The CSC deal has progressed significantly with draft agreements submitted to government through the Ministry of Finance for sign-off. Nssa is currently conducting pre-due diligence exercises at CSC, and has seconded a Nssa resource person to work with the current board and management of CSC in reviewing their strategy and structure.
“It is anticipated that once the shareholder agreements have been signed off with the relevant Ministries within government, the due diligence processes will be conducted.
“Such due diligence will enable Nssa to develop a sustainable business plan to be followed by the injection of capital in the 1st half of 2018.
“This investment is part of efforts to grow and improve sustainability of the Nssa fund and is in line with government’s thrust of Command Livestock.
“The revival of CSC will empower communal and commercial cattle farmers and contribute to the resuscitation of the agricultural industry.
“It is difficult to say when CSC will operate at full throttle. However, the country will be updated through quarterly statements that will be issued by the authority.”