Grindrod acquires 51% stake in United Refineries

Published: 04 March 2014

GRINDROD Trading has acquired a 51 percent stake in Bulawayo-based fast moving consumer goods manufacturer United Refineries Ltd, managing director Mr Busisa Moyo said.

"We have just concluded the transaction after obtaining all regulatory approvals," said Mr Moyo.

He could not reveal the value of the transaction citing confidentiality.

Grindrod Trading is a subsidiary of Grindrod Limited, a JSE-listed South African-based holding company involved in the movement of cargo by road, rail, sea and air.

Grindrod Limited operates four divisions - shipping, trading, financial services and freight services.

Under the transaction, GT will arrange lines of credit for URL to boost capacity, said Mr Moyo.

This is in addition to a commercial contract signed for the supply of the raw materials.

"At least $10 million is required to boost the capacity of the business," said Mr Moyo.

URL is the country's second largest cooking oil refinery with monthly capacity of 8 000 tonnes of oil seeds.

Over the past one and half years, the company raised its capacity utilisation to around 50 percent from an off low base of 10 percent, said Mr Moyo.

"But we are still facing a big challenge with regards to cheaper imports which are making locally produced goods uncompetitive as compared to imported ones," he added.

Recently, Mr Moyo told local media that the company was looking at raising capacity to 75 percent by year end and was also working on re-opening new markets.

"We are working on reopening new markets for our cooking oil and soup in countries like Zambia, the Democratic Republic of Congo, Mozambique and plans are at an advanced stage," he said.

Some of the URL popular brands now visible in most shops include Roil Cooking Oil, Sunshine Cooking Oil and image soap and Honeygold Cooking Oil in 25 litres and 250 litres.

Grindrod also wanted to buy a CFI Holdings' 49 percent in Victoria Foods but the Zimbabwe Stock Exchange listed company announced last week that the deal had collapsed.

Grindrod had agreed to pay $3,2 million for the CFI's 49 percent shareholding in Victoria Foods.

Under the transaction, Grindrod, also wanted to provide Victoria Foods with a $2,8 million shareholder loan at an annual interest rate of 8 percent, a circular published by CFI in June last year said.

Grindrod had also agreed to sign commercial contracts that would result in Victoria Foods accessing a $12 million 90-day grain procurement facility.
- herald