via Interfresh to delist from ZSE – DailyNews Live by Eric Chiriga 20 NOVEMBER 2013
Horticultural concern Interfresh Limited (Interfresh) plans to delist from the Zimbabwe Stock Exchange (ZSE).
The group, intending to relist in the medium-term after “aggressive restructuring”, said its stock is not reflecting true value on the local bourse as it has “consistently traded at a discount to net asset value of the company and… other valuation methods.”
The transaction — subject to shareholder approval at a December 11, 2013 extraordinary general meeting — will be with effect from year end.
Interfresh said after delisting, it planned to raise $6 million capital through convertible debt from private equity and structured finance markets, using valuation methods other than the stock market.
“Raising capital at the current valuation has proved rather limiting. The company does not have
significant borrowing capacity which can be achieved at reasonable cost,” it said, adding that only $3 million was raised a few months back.
In July, Interfresh embarked on a $3 million rights issue with the funds earmarked to recapitalise operations and retire debt.
The group’s voluntary departure from the bourse comes as it disposed of its head office and lost part of its strategic land — Mazoe Citrus Estate (MCE).
Early this year, government — through the Lands ministry — acquired 46 percent of MCE’s arable land and allocated it to an unspecified party.
“This portion of land represents…. 30 percent of its (Interfresh) budgeted revenue for the financial year 2013 and 52 percent of the value of immovable and biological assets,” said Tawanda Namusi, Interfresh’s company secretary then.
However, market observers contend that due to these developments, Interfresh had no option but delist.
“Over the years Interfresh has been facing challenges. The disposal of its head office and loss of its land seriously depleted its balance sheet in a big way,” said one analyst who preferred anonymity.
“This has a significant impact on their share price. The business is hinged on land and they lost a significant and attractive piece of it,” the analyst said, adding that “they should have de-listed way back. It was long overdue.”
Meanwhile, Interfresh said post delisting, it will remain a public company while trading of its shares will be by private valuation and agreement between buyer and seller.
The group will also discontinue publication of its financials.
Interfresh, which is in the business of producing, processing and marketing agricultural, horticultural, agro-industrial and allied food products in both the local and export markets, has since dollarisation in 2009 not been adequately recapitalised but relied on debt financing to sustain its operations.
In 2011, the company — which has three strategic divisions namely, Citrus, Flowers and Trading — secured a $5 million six-year loan to fund both capital expenditure and working capital.
COMMENTS
46 percent of MCE’s arable land allocated to an unspecified party? Is this self-censorship or a lack of investigative journalism? Isn’t this “unspecified party” none other than Grace Mugabe? Grovelling to authority is a shameful betrayal by the Daily News to keep its readers informed.
This article raises very interesting reading to those who follow corporate developments in this country. I am very convinced that other than harsh external factors that have resulted in the poor performance of the Zimbabwean economy the reality is the bulk of poor company performances and closures are due to mismanagement. The list of financially sound companies that were taken over by black boys but failed is endless but I will focus on Interfresh for now.
Firstly Lishon took over this company when it was on solid footing by pushing out competent Directors and from that day on the company has been on a downward spiral. The major question that any sensible investor should ask themselves is whether the problem is inadequate funding or funds are being mismanaged.
a. Barely two years ago the Board and management led by this CEO sold the asset/building of the company on the basis that they intended to retire short term debt and raise working capital to get things going
b. The same people were back on the market with a USD3 million dollar rights issue barely 6 months ago, and now this proposal. The question is if the same people came several times to ask for investor money but things seem not to have worked, then isn’t it about time to also look at the variable that’s been constant (same management)for the story to change. What guarantee is there that this time they are going to get it right if they get additional financing. Isn’t this a clear case of management that can not do an impact assessment to assess what needs to be done to turn around the fortunes of an ailing company. What is really the agenda of this man. Strip company assets?
Its investors who have got money to throw down the pit who are going to believe this hogwash. If any serious investor wants to invest into this company the question they must be asking themselves is if they believe in the business, does this company have the right people to manage their funds.
The quality and integrity of boards that are presiding over such transactions in this country leaves a lot to be desired. How shareholders also approve transactions like these without taking management to task is a clear demonstration of how big institutional investors have failed Zimbabwe and contributed to the demise of this nation. The worst thing is we have people managing people’s pension yet doing such a disservice by just jumping to invest in such transactions.
Its also about time a new revolution is forged against black entrepreneurs who have decimated sound companies, making hundreds of innocent people destitute whilst they line their pockets. We can blame politics all we want but the reality is a lot of black entrepreneurs have done Zimbabwe a disservice. Time to look at ourselves as black people.