NSSA, Zimre plan CFI recapitalisation

Source: NSSA, Zimre plan CFI recapitalisation | The Financial Gazette July 6, 2017

MAJOR CFI Holdings shareholders, National Social Security Authority (NSSA) and Zimre Holdings Limited, are backing management plans to inject about $12 million into the ailing agro-industrial business.

NSSA and Zimre have a 41 percent shareholding in CFI, held through their Stalap Investments.
Contrary to earlier reports that it had exited CFI, NSSA retains a material interest in the company, indirectly through Stalap.

Stalap was initially owned in equal measure by Zimre and its subsidiary Baobab, but NSSA swopped its 13 percent direct shareholding in CFI for a 31 percent stake in Stalap.

The consolidation of NSSA and Zimre shareholding, using Stalap, is intended to create a formidable voting block that can drive the restructuring process at CFI.

The restructure would involve a $12 million rights issue, which would then be followed by a mandatory offer to minorities by Stalap, internal documents show.

“CFI management have approached shareholders with a proposal for a $12 million rights issue. The main purpose of the rights issue is to capitalise the business and its subsidiaries,” the documents read.
“It is the intention of Stalap to support the $12 million rights issue being pursued by the company and to underwrite the issue. After the rights issue, Stalap will then make an offer to minority shareholders.”

CFI intends to use the rights issue proceeds to recapitalise some of its business units, Agrifoods and Victoria Foods, which are currently under judicial management, as well as retailer Farm & City, which contributed 94 percent of the group’s turnover in the half-year to March 2017.
According to Zimbabwe Stock Exchange (ZSE) listing rules, a shareholder who reaches 35 percent shareholding in a listed company can make a mandatory offer to minorities.

Another CFI major shareholder, Nicholas van Hoogstraten, is currently in the process of calling for an extraordinary general meeting where he seeks to reverse a $18 million land deal concluded with Fidelity Life Assurance in 2015.

Van Hoogstraten claims to have increased his shareholding in CFI to 45 percent, but brokers advising NSSA and Zimre put his interest at 35 percent.
In the six months to March 31, 2017, CFI narrowed its after-tax loss to $272 784, from a $6,1 million loss incurred in the prior half year-end, supported by the improved performance of its Farm & City unit.

Revenue increased by 30 percent to $24,9 million during the review period, from $19,1 million recorded the previous year.

Acting chairperson, Grace Muradzikwa said Farm & City opened five new branches in the period after recasting itself as an agro-inputs and building materials hardware retailer.
Earnings before interest, tax, depreciation and amortisation improved to $1,45 million from a negative $4,6 million incurred during the prior comparable period.