METRO Peech & Browne Wholesalers (MPBW) has shut down for a month as it prepares to receive a US$13,5 million corporate rescue capital injection to kickstart profitability.
In September, the company was placed under corporate rescue under Oliver Mtasa of Crowe Advisory (Private) Limited (OMCAPL) after it became technically insolvent following years of poor financial performance.
As of the end of August, the firm had net liabilities of approximately US$12 631 411, against total assets of US$6 071 723.
In a statement yesterday, OMCAPL said the closure of the wholesaler came into effect at the start of the month.
“This notice serves to advise that with effect from November 1, 2023 to November 30, 2023, all Metro stores across the country will be closed for the following reasons: stock takes, branding, restructuring, restocking of stores, systems upgrade, and renovation and rebranding of stores,” OMCAPL said.
“This follows the resolution of the creditors at a properly constituted meeting held in terms of section 143 of the Insolvency Act on the 1st of November 2023 to adopt the corporate rescue plan bringing in a new investor.”
Speaking to NewsDay Business, OMCAPL corporate rescue assistant practitioner Raymond Sibanda said the resolution to close was passed by 98,25% of affected creditors and a new investor called Sub-Sahara Capital Group (SSCG).
“A new investor called Sub-Sahara Capital Group will inject US$13,5 million into the company. The investment into Metro Peech will cover working capital and payment of creditors, Sub Sahara Capital will be the majority shareholders,” Sibanda said.
Following the injection of the capital, SSCG will become the majority owner in MPBW.
According to the corporate rescue plan obtained by NewsDay Business, a number of prospective investors indicated an interest to be considered investors in the business.
“The CRP (corporate rescue practitioner) held meetings with the prospective investors and provided information which included both financial and non-financial. The prospective investors were then requested to submit their offers. The prospects were to be assessed on the basis of both the financial and the qualitative factors for the provision of a sustainable business model going forward,” partly read the plan.
“It is on the basis of this assessment that the Sub-Sahara Capital Group (SSCG) bid was considered acceptable. SSCG is a significant player on the market with investments in wholesale and retailing, agriculture, mining, financial services, tourism, human resources and manufacturing. The assets of Metro Peech and Browne will be acquired by an SPV (special purpose vehicle) and employees will be transferred to the SPV.”
OMCAPL said this was because the existing business failed to attract investment from potential investors due to its unappealing return on investment and the substantial capital requirement of circa US$30 million.
The firm’s capital requirement comprises US$10 million for working capital and US$20 million for liabilities.
“Furthermore, it is considered more financially viable commencing a new venture from the ground up, which would necessitate an estimated capital infusion of around US$15 million. SSCG will inject at least US$13,5 million into the SPV,” further read the plan.