FIVE new investors have expressed interest in investing in food manufacturing firm, Cairns Holdings and are currently conducting due diligence after another potential investor, Vasari Global of South Africa, failed to commit, The Source has established.
Last August, Cairns was close to reaching an agreement with Vasari Global which reportedly wanted to acquire the Reserve Bank’s 67% stake in the company and assume its $25 million debt but failed to reach an agreement.
“Cairns has entered into negotiations with five potential investors after Vasari was unable to commit to the transaction within the stipulated timeframe,” an official familiar with the developments told The Source yesterday.
“In addition, major creditors are considering a debt-to-equity swap in pursuance of a resolution passed in the first creditors’ meeting.”
The official did not name the prospective investors but in the past, Dairibord Holdings, Judah Holdings Limited, Eastern Trading Company Limited of South Africa and a consortium of Russian investors had reportedly expressed interest in acquiring a stake in the company, but it could not be established if they had renewed their interest.
In 2013, the company, which has been under judicial management for the past two years, accessed a US$1 million bailout under the Distressed and Marginalised Areas Fund (Dimaf), a joint government and Old Mutual facility for troubled companies, but required a further $8 million to get on the path to full recovery.
It used the funds to acquire a new plant and machinery for chips and snacks production.
“The group continues to perform reasonably well in a difficult trading environment,” the official said without disclosing figures.
Cairns has since disposed of a property owned by its subsidiary Charhons and part of the proceeds would be used to recapitalise the business. It also relocated Charhons operations to the main factory in Ardbennie.
“The funds will be used to acquire plant and equipment for the snacks and groceries, and the fruit and vegetable business units. This will go a long way in improving the production capacity, efficiencies and profitability of the group,” said the official.
“In addition, this will also enable the company to pay a sustainable dividend to creditors on a regular basis.”
Established in 1947, Cairns is one of the country’s oldest food manufacturing companies. Its fortunes took a nosedive after adoption of multi-currencies in 2009, forcing it to apply for judicial management and delisting from the Zimbabwe Stock Exchange.