The placement of the Cold Storage Company under a corporate rescue plan to facilitate its revival has raised one fundamental question: Where does Boustead Beef, the British company that had promised to invest US$130 million into the operation, fit in?
Another crucial question is: Is the government rescuing the CSC or Boustead Beef?
The government has appointed Ngoni Kudenga of BDO Zimbabwe to implement the rescue plan.
According to papers filed by Lands and Agriculture Minister Anxious Masuka, the government blamed workers and former managers for stifling Boustead Beef from resuscitating the CSC, but workers believe the papers filed by Masuka were drafted by Boustead Beef which was trying to exonerate itself from its failure to implement the agreement it had entered into with the government.
Others say Masuka accommodated Boustead Beef as a diplomatic way of easing the company out without incurring any legal penalties.
Under the deal that flopped Boustead Beef was supposed to do the following:
- raise and invest a minimum of US$130 million into CSC over five years, being for both capital expenditures and working capital for the business;
- pay off CSC financial debts totalling US$42 530 597;
- pay rentals of US$100 000 per annum during the first five years of the concession agreement;
- take over and run the management of the following CSC ranches for an initial period of 25 years: Maphaneni; Dubane; Umguza; Chivumbuni; Mushandike; Willsgrove; and Darwendale;
- take over and run the management of the following abattoirs for an initial period of 25 years: Bulawayo; Chinhoyi; Masvingo; Marondera; and Kadoma; and
- take over and manage for an initial period of 25 years, the Harare, Gweru and Mutare distribution centres and residential properties of CSC.
Nothing of the sort happened. Boustead did not even fulfill any of the obligations that it had promised to do in the first year.
It had promised to invest US$45 million within the first year broken down as follows:
- Refurbishing of abattoirs, canning factory, distribution US$6 million.
- Working capital abattoirs, canning factory, distribution US$5 million.
- Logistic fleet, vehicles, distribution- abattoirs US$2 million.
- IT systems/meat matex/stock control/etc US$3 million.
- External cattle purchase facility US$5 million.
- External buy back facility for processed beef US$5 million.
- Capital expenditure ranches and feedlots US$4.5 million.
- Working capital ranches and feedlots US$3 million
- Logistics fleet ranches, vehicles US$1.5 million
- Cattle purchase US$10 million
Kudenga, therefore, has a mammoth task before him including establishing assets that have been stripped by Boustead Beef.
The company recently sold more than 200 CSC cattle at Umguza and earned more than $6 million dollars.
It has cut down gum trees at the Bulawayo headquarters and sold them.
It has been collecting rentals from CSC properties for more than 20 months but under the agreement it was supposed to pay US$100 000 a year in rentals.
It has retrenched scores of workers paying them a pittance.
The other fundamental question is what will Kudenga do about Wet Blue, the CSC subsidiary which was taken off judiciary management but seems to have been “parcelled out” to some name droppers that were allegedly assisting Boustead Beef on the main CSC deal?