CFI Holdings Limited will dispose of 81% of its interest in Langford Estates (Private) Limited to Fidelity Life for $18 million through a debt-for-land swap arrangement.
BY VICTORIA MTOMBA
In a cautionary announcement on Wednesday, CFI company secretary Panganayi Hare said the group had concluded the sale and purchase agreement as well as the debt assumption and compromise agreement.
Hare said Langford Estates’ sole asset is a piece of undeveloped urban land located in Harare South measuring 834 hectares in extent. He said the pricing of the transaction was based on an independent professional property valuation.
“If concluded successfully, the transaction will result in CFI settling all its interest-bearing debt owed to local financial institutions, with only the remaining interest-bearing one being long-term facility of $2,3 million owed to PTA Bank. In the not-too-distant future, a general meeting of shareholders shall be called to consider this transaction,” he said.
NewsDay reported in July that Fidelity Life and CFI were in negotiations for a debt-for-land swap deal.
Fidelity will get the land and the estate has approved a plan for 11 500 housing units. The value of the projects is estimated at $215 million.
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Fidelity Life recently said its board had approved the acquisition of a significant stake in a company that has ownership of land through a debt-for-land swap arrangement.
CFI Holdings is also seeking shareholder approval to ratify the exceeded borrowing powers in 2014 and to seek authority to borrow $20 million this year as the company is not allowed to borrow amounts exceeding three times its capital and distributable reserves.
The group has been waiting for the debt-for-land swap deal to be effected so that they could exceed the threshold in borrowings.
In the half-year ended March 31, 2015, CFI Holdings narrowed its loss to $3,7 million from $5,5 million in the comparable period in 2014 after the group halved its operating loss before depreciation, impairment and financing costs.
