‘RBZ wrapping up CAPS Holdings deal’

Source: ‘RBZ wrapping up CAPS Holdings deal’ – DailyNews Live

Ndakaziva Majaka      13 February 2017

HARARE – The Reserve Bank of Zimbabwe (RBZ) is in final negotiations with
shareholders of the country’s largest pharmaceutical group, CAPS Holdings
(CAPS), amid indications government has already secured several takers for
the drugs company.

Industry minister, Mike Bimha, last week told the businessdaily that while
there were several local and international investors who wanted to snap up
the company, his ministry and the central bank are still resolving
shareholder matters with the current ownership.

“What actually happened was that we had a number of interested partners,
but I was advised by the Reserve Bank that there were still issues they
wanted to finalise with the previous owner or the current shareholder.

“They said they would want to actually get to a point where they would say
they had finalised everything, telling us we could invite other investors
after this point. Our discussion with the Reserve Bank governor was that
let us finalise all issues,” Bimha said.

He noted that despite the hiccups, his ministry had already been
approached by interested parties.

“There are a number of interested parties both local and beyond our
borders. But, we do not want to bring in a new investor and then in a
while find we still have outstanding issues,” Bimha said.

This comes as the Industry minister last year said discussions to finalise
takeover of CAPS were proving difficult as the company’s largest
shareholder, Frederick Mtandah, has been shifting goalposts mid-dialogue.

“With CAPS, we have had issues that have taken a long time to be resolved,
issues to do with the current shareholders of CAPS. Negotiations have
taken place with the ministry and the Reserve Bank of Zimbabwe (RBZ).

“Every time we thought we had reached an agreement then goalposts are
changed the next day, and this has really taken a lot of our time, but we
believe that we will continue with discussions,” the minister said.

The pharmaceutical group urgently requires $6 million in recapitalisation
funds, with the drug-maker currently operating at five percent of
installed capacity.

Government assumed control of the struggling drug-maker in August 2016
after buying out Mtandah, however, several unresolved matters still stand.

CAPS recently faced a critical funding shortfall, with its property
escaping a public auction aimed at amortising a $4 million loan owed to
two major banks – CBZ Bank and FBC Bank.

Through its special purpose vehicle aimed at housing bad loans – the
Zimbabwe Asset Management Corporation – government recently assumed the
pharmaceutical company’s debts to financial institutions.

CAPS is only operating one out of its four plants in the capital, Harare,
as a result of lack of funding from new shareholders, government, leaving
the country’s health institutions and donors with no option but to procure
medicines, including intravenous drip water, outside the country.