Bakhresa gets 100pc of Blue Ribbon; but indigenisation review in 5 years

mushohwe chris

Indigenisation Minister Chris Mushohwe

TANZANIAN multi-national Bakhresa Group is set to acquire the entire shareholding of Blue Ribbon Industries after creditors approved its proposed US$40 million capital injection.

The takeover is however subject to regulatory approvals although initial indications show that the group will assume control of the local milling company in December.

Judicial manager Reggie Saruchera said shareholders and creditors of BRI approved the US$40 million takeover of the company at a meeting held this morning. “Only one creditor/shareholder voted against the transaction. With this out of the way, BRI is targeting 100 percent capacity utilisation by December as the investors will immediately inject us$20 million.” The US$20 million will go towards recapitalisation, clearing liabilities to creditors, workers and financial institutions.

Because of the current insolvency state, Bakhresa will acquire the entire shareholding of BRI at a purchase price of US$1, giving it control and full ownership of the other subsidiary companies; Blue Ribbon Foods, Nutresco and Mitchell. At present, BRI is owned by Orchadrian Enterprises 74 percent, Cereal International 16 percent and the Employee Share Trust 10 percent.

Orchadrian is a consortium comprising Michael Manga, Charles Botso, Joseph Mawunganidze Manzira, George Sisipenzi, Monalisa Pfende, Stanley Bhobho and Patricia Waramba.

“The share certificates held by the shareholders will be cancelled upon payment of US$1. Concurrently to this, Bakhresa will advance US$12,01 million to enable the judicial manager to settle with creditors.” However the net amount owed is US$29,44 million.

He said Bakhresa will operate at full ownership for the next 5 years upon which the indigenisation plan could be subject to review. Saruchera said the Zimbabwe Revenue Authority (ZIMRA) has also agreed to waive tax obligations on the group to enable the company to turnaround.

Saruchera said the implementation of the creditors’ scheme, after necessary approvals will commence this month with the completion of a hand-over take-over of BRI.

According to Saruchera, immediate cash payments will amount to US$12 011 111 with secured creditors such as PTA and FBC banks set to receive 90 percent pay out of their total debts.

PTA Bank will be paid US$2 163 663 from its total debt of US$2 401 261 while FBC which is owed US$1 157 662 million will be paid US$1 041 896. Atlas Trading which is also secured will be paid 40 percent of its US$7 ,4 million balance. Employee costs and statutory obligations will be paid at 62 percent and 80 percent of their debts respectively. ZB bank will receive a pay-out of 30 percent and concurrent creditors 15 percent.

A further US$20 million will be invested into the company over a period of 5 years to replace old and antiquated equipment. “This will take capacity to 100 percent from the current 35 percent. He said at least US$10 million worth of raw material is required to operate at full capacity which will be supported by a full cycle of payments.

Saruchera said the group has been operating through the Mega Market deal in order to keep a presence of the group’s brands in the market. “We have been operating through the Mega market deal and we are achieving breakeven,” he said.