HARARE — Cairns Holdings is close to reaching an agreement with Vasari Global of South Africa who plans to inject fresh capital and assume its $25 million debt, a source close to the developments said yesterday.
Vasari, which is set to acquire the Reserve Bank’s 67% shareholding in the company, would assume Cairns’ debt of $25 million which would be paid over time, the source said, adding that negotiations over the debt were the “biggest hurdle” in the process.
“We are finalising the terms of the structure of the agreement with the new investor. They are doing assessments on the company’s requirements,” said the source.
He, however, declined to give a timeline saying the deal would be finalised in the “short-term.”
“It takes time because there are various shareholders involved. The investor also wants to see if they can meet the payment plans (for the debt).
“There is need to rearrange payment and a scheme of arrangement for creditors and shareholders is being finalised,” he said.
The source said the new investor would also bring in working capital to replace antiquated equipment and acquire delivery trucks for the company.
“We also need to revamp and bring in modern equipment,” he said.
Last year, the company, which has been under judicial management since November 2012, accessed a $1 million bailout under the Distressed and Marginalised Areas Fund (Dimaf), a joint government and Old Mutual facility for troubled companies, but requires a further $8 million to get on the path to full recovery.
It acquired new plant and machinery for chips and snacks production after accessing the Dimaf funds.
Increased productivity has seen the firm recalling the bulk of its 667 employees.
Established in 1947, Cairns is one of the country’s oldest food manufacturing companies. Its fortunes took a nosedive after adoption of multi-currencies subsequently applying for judicial management and delisting from the Zimbabwe Stock Exchange.