via Grace Mugabe land seizures put Interfresh in dire straits February 28, 2014 By Chris Muronzi Zimbabwe Independent
THE seizure of Interfresh Holdings Ltd’s Mazoe citrus estate, the group’s prime land asset, by President Robert Mugabe’s wife Grace has blocked external lines of credit to the firm as it emerged traditional financiers, including Industrial Development Corporation South Africa (IDCSA), now fear their investments are at risk as the company struggles for survival.
Grace’s land grabs have left Interfresh tottering on the brink of collapse, while investors are scurrying for cover fearing their money will sink in an increasingly unviable enterprise being destroyed by the unceasing land confiscations.
Documents seen by the Zimbabwe Independent show Interfresh has total land holdings of 3 800 hectares. Grace has taken 870 hectares (23%), leaving Interfresh with 2 930 hectares (77%).
Of the 3 800 hectares, only 1 067 hectares is arable. Grace grabbed 414 hectares (39%) of arable land, leaving Interfresh with 653 hectares (61%).
This latest land acquisition by the First Family effectively renders Interfesh unviable, compromising its ability to pay back IDCSA its loan administered by the state-owned Agribank.
Documents show that after the second land grab last December, Interfresh’s total budget revenues plunged to US$8,7 million from US$10,4 in December 2012 after the first seizure. The actual turnover dropped to US$3,1 million compared to the budgeted turnover of US$10,4 million.
“The business started facing working capital constraints and operated at less than 30% capacity utilisation throughout 2013,” documents say. “As a result of these developments, Interfresh fell behind in terms of its loan repayments to IDCSA.”
IDCSA last year in March sent a delegation to Zimbabwe to protest against escalating political or country risk hitting Interfresh. Since then things have been going horribly wrong, particularly after Grace’s second wave of land seizures.
As a result this has unsettled financiers currently bankrolling the country through lines of credit to banks and institutions of national interests such as PTA Bank, Development Bank of Southern Africa (DBSA), Afrexim Bank, African Development bank (AfDB) and IDCSA.
IDCSA was on the verge of finalising a line of credit to a local institution, but has now frozen the facility as sovereign risk rose in light of the Interfresh problems. Zimbabwe continues to experience a liquidity crunch that has hampered government’s efforts to resuscitate the ailing economy, amid indications that macro-economic fundamentals are on the slide.
DBSA and IDCSA share the same shareholder — the South African government — and this is causing grave concern in Pretoria.
Interfresh assets funded by the IDCSA include irrigation equipment such as underground main lines, micro jets, filtration systems, pump houses, dripper lines as well as fertiliser and chemicals used for the rehabilitation of the estates’ orchards and cropping programmes.
Documents, which include letters, show that Agribank is concerned by the land confiscations after it had on-lent US$5 million it got from the IDCSA.
According to the documents, AfDB, International Fund for Agricultural Development (IFAD), IDBSA, Agence Francaise de Development (AFD) and the Overseas Private Investment Corporation (Opic), IDCSA and Proparco have taken great exception to the occupation of Mazoe citrus by the First Family.
The seized land housed 52% of the assets, both biological and immovable, leaving the total assets of US$11,7 million, suffering a US$5,7 million impairment on the balance sheet.
After the new occupation of the land, Interfresh is said to have fallen behind in terms of the repayment of the US$5 million IDCSA loan advanced to Agribank under a US$30 million line of credit in March 2011. The funds went into working capital and capital expenditure.
IDCSA sent a delegation to Harare and indicated to Agribank and Reserve Bank of Zimbabwe that the institution wanted to reconsider its local investments.
According to documents, Agribank continued engaging IDCSA and remained up-to-date with all repayments, including the Interfresh portion amid indications the corporation mulled possible restructuring of the outstanding Interfresh debt until fresh land grabs. It also planned to award a capital repayments moratorium while the agricultural group readjusted its business model post the December 2012 land reallocation exercise.
Prior to the first land reallocation exercise two years ago, Interfresh is said to have been on the market seeking to raise additional capital injection and had secured an investor — African Agriculture Fund (AAF) who also became an equity partner.
AAF is a US$243 million fund focused on SMEs. Its shareholders are the AfDB, Alliance for a Green Revolution in Africa International Fund for Agricultural Development, DBSA, AFD, Opic and Proparco.
An investment agreement was signed in early December 2012 for a US$4 million recapitalisation programme. AAF is said to have disbursed US$1,2 million in mid-December 2012 before the land reallocation exercise was implemented. This loan was earmarked for working capital purposes and partly to reduce the exposure of Interfresh with Agribank.
Two weeks after this initial US$1,2 million investment had been released to Interfresh, the first batch of land was seized. Another US$1,7 million rights issue followed in 2013.
As part of the AAF deal, the local community would have benefitted after the fund set aside €500 000 in technical assistance to small scale farmers.
Interfresh also raised US$3 million through a rights issue last year, which got a subscription rate of 57,73%. The rights issue was underwritten by MetBank.
Parts of the funds were used to refurbish Mazoe citrus juicing factory as well as for working capital requirements for the current cropping season. After the rights issue, the business was a going concern and the AAF SME fund was willing to pursue further capital raising programmes, the documents read.
According to the documents, the company’s remaining assets are only US$4,6 million against US$11,7 million liabilities.
“In its current form the business of Interfresh is therefore not viable. The remaining business operations which are Mazoe Citrus juicing factory and the citrus plantations, though viable as stand-alone business units, cannot carry the total liabilities of the entire business pre-December 2012 period,” the document reads. The land-grabs have also ruined the group’s planned capital raise as it emerged that an additional US$2,5 million in working capital from AAF that was due by January 31 2014 has now been frozen.
Investigations show that IDCSA is planning to call on its facilities in the economy. The institution has advanced facilities running into several millions of dollars in sectors such as banking and infrastructure. On top of that, the investment committee members of AAF are now viewing their Interfresh investment as risky.
According to documents, AAF is under pressure from its shareholders who are now mulling possible legal action in terms of Bippa to protect the investment.
A visit to Mazoe yesterday showed the Mugabes have turned a once productive farm into largely derelict land. For instance, lemon orchards on the land they occupied two years ago are now virtually rundown. Only part of the land is being used.
The Interfresh fiasco could have serious negative consequences on Zimbabwe’s image and investment prospects.
“The investors are considering legal action and this will seriously damage the image of the country as an investment destination and worsen the current liquidity crunch and the general situation unless corrective measures are taken urgently,” an investor said. “The trouble is that this case involves the president’s wife and for that reason it is a very serious issue.”
The problem is these businesses align themselves with Zanu thinking they will escape the pillaging, there is no honour among thieves. you might get away with it for a year paying bribes, and then boom the axe will come down. its going to get worse, the cake is getting smaller and smaller.
Now that the family is getting bigger with in laws, they have to grab more companies and land to satisfy the greed.
The days of Interfresh as a dynamic company are long over. Since it was taken over by indigenous interests it has been a vehicle for stealing investors money. Bad management has killed this company. This business with Grace is, from a certain point of view, overdue justice. Though this does not exculpate the First Lady from her habitual criminality.
Maybe a naive question but I will ask anyway. If Disgrace grabbed a chunk of the arrable land should she not grab a chunk of the debt too? How do these things work anybody know?
The simple and obvious answer is “no.”
If a normal person tried to write a book about the stupidity of Mugabe his wife and zanupf they would not be able to get their minds and thoughts to stoop low enough to be able to write something that would be believable.
Mnangagwa will soon be in her bed.Two of a kind,evil to the core.”First Lady”my foot.Their day will come and Zimbabweans will rise up and be counted,Chinese are a big problem but any sign of unrest and they will flee.The sooner the better.
God Bless Zimbabwe.Wonderful vibrant people.You WILL rise and become a nation again.
Enough of this looting and criminality outside proportion. Let us all meet at freedom square Bulawayo city hall on 18 April 2014. Now is the time to get rid of this rote once and for all time. Let us take charge of our destiny.
Mazoe are in a spot of bother too when you think of it. How many viable citrus farms are left? In Chegutu alone the so-called big wigs have grabbed the prime properties and rendered them barren. Heck you only have to drive down the Kadoma road to see one of them. Then take a wander down the Chinhoyi road and if you see anyone selling pockets of oranges along there, it will be a miracle. So let Grace have her Interfresh, and yes Lucy, along with the debt would be a great idea. Lets see what success she makes of it.
The rule of law has been utterly sacrificed to lust for power and greed for money. This embrace of a primitive social order is mugabe’s legacy.
Soon Mugabe will be gone and then Grace better be afraid. Very afraid.
@ Lucy. Lucy they just grab and ignore the debt. In 2000 when the ‘ war vets ‘ raided some farmers took them to their bank managers and introduced them as their new partners and asked for the debt to be shared but to no avail. That is why the country is in such a state because none of the bank loans were able to be repaid, yes the whites were not rich and needed the banks to support their businesses just like any company, that is business. Interfresh a big and once prosperous company also needs loans, so again not just the company but all the people of Zimbabwe will suffer when they are unable to pay their debts, which is when the bank will stop cashing their cheques and they will not be able to pay their workers. So the land grab goes a lot further than just taking land and it affects the nation not just the rightful owners.
These sort of articles clearly reflect that we have our own ‘mafia’ who who pretend they are decent people. At least the ‘mafia’ elsewhere don’t pretend to be any else but thugs who will take whatever they want by whatever means necessary. So much for the apologists who harp on about protecting his legacy. These people disgust me!!!
Mrs Disgrace herself! And she sat at her daughters wedding piously listening to a sermon from the Word of God. God will NOT be mocked!
Didn’t Disgrace destroy Gushagango Dairy, it used to produce 6 million litres a year and she was bragging in the papers about her success of producing a mere 1.5 million litres per year, stupid cow can’t even do basic maths. Good luck to Zimbabwe with these brilliant entrepreneurs who can’t even master basic maths
Bankrupt her .no bank in the world would support this thief. The land belongs to Zimbabwe not Grace
That woman called Grace has no shame at all together with her son! They are a mafia family supported by a tyrant. History will repeat itself one day when the majority will rise and claim a fair share of the country’s resources. All those who are amassing wealth at the expense of the majority will be taken to task.
Corruption and corruption of a mega size in the highest office in the land. First lady please demonstrate that you are anti-corruption. You are fighting your ZimAset, you have destroyed ZANU PF. Anywhere for me I say continue with self destruction. You are right Grace chisingapere chinoshura. Wait for 2018 when you will really be disgraced. Interfresh is listed on the stock market and you have wronged many shareholders. I think to civilize you, Gushungo will one day revert to the people of Zimbabwe.
The saddest thing here is that zimbabweans just observe and do nothing while mugabe and zanupf squander their ill gotten wealth.
Do todays zimbabweans not think that if they do nothing this is exactly what their children are going to inherit and their childrens children.Surely you have a responsibility to your offspring.??????????????????????????
Ya but the problem is this is not the 70s. There are no firm bases outside the country and no offers of support, training, weapons or logistical help.
Even if one wanted to join a revolutionary movement there are none.
Accept or not, you EU rivals, AFRICA is the richest throughout the world, that is why when EU felt starve invaded Africa but they never get ride of the resource even they haven’t reduced one Kg, we don’t even think they took any, we are full of resource we don’t feel except a fly touches our body while they are still attempting to invade again, but Africa is related now and they have parental lineage not like you!! I advise all fellows of black Africans connect with this page to ask EU to let us know where are they originated and their parental lineage, stop discussing with them about the political affairs first ask them what i explained above.
Mai Mugabe is right the pple at helm of this once vibrant company are not business minded and only thrive on scandalous deals. Siyai Amai vaite business she has proved she is able,her dairy project is a perfect example of good business management.