$20m fresh investment into Cairns Holdings

Published: 25 November 2013

GRANT Thornton Camelsa is on the verge of sealing a deal that will result in the injection of over $20 million in fresh investment into Cairns Holdings by South Africa's Vasari Global Limited.

The prospective South African investor was short-listed as the preferred candidate to acquire the Reserve Bank of Zimbabwe's 67 percent stake in the food processing company which is under judicial management,.

Other prospective investors angling to buy the stake are local firms Dairibord Holdings Limited and Judah Holdings Limited and another South African firm, Eastern Trading Company.

Vasari Global is firmly on course to assume a controlling interest in Cairns, but sources said Grant Thornton has kept the other bidders waiting on the wings in case the unexpected happens.

While Grant Thornton Camelsa was not willing to discuss finer details of the transaction, information gleaned by The Herald Business is that only a couple of issues remain outstanding.

Negotiations have reached advanced stages with exchange control and minority shareholder consent issues being the main loose ends that the judicial managers are working to tie up.

Vasari will also have to comply with indigenisation and empowerment laws compelling locals to hold at least 51 percent stake in local firms with expectations high its proposal will be accepted.

Grant Thornton Camelsa advisory manager Mr Bulisa Mbano confirmed the deal was nearing finality, but would not be drawn into discussing specifics of the issues still outstanding.

"We are finalising the transaction. As you are aware, there are various stakeholders that have to agree to the transaction. We are also finalising with the investor (the terms of the investment)," he said.

While $20 million has been bandied around as the amount the investor will inject into Cairns, sources say the figure could top $30 million as the group inevitably needs new equipment.

The company enjoys near monopoly in the corn- based snacks market, but is facing intense competition in other areas such as canning, where new equipment is needed most.

Some of the old equipment and a new set of machinery have been procured with funding obtained under the Distressed Industries and Marginalised Areas Fund to raise capacity utilisation.

Capacity utilisation, which had plummeted at the foods manufacturer, is now ranging between 20 percent and 30 percent with over 500 workers all back at work. Most of them had been put on unpaid leave while those that remained behind only worked two weeks in a month.

Cairns might have run into financial difficulties, but this should only be viewed in terms of limitations the company faced in accessing reasonably priced adequate medium- to long-term capital.
- herald