Zimbabwe’s Minister of Agriculture Anxious Masuka, has asked Ngoni Kudenga, of BDO Zimbabwe Chartered Accountants, who was appointed the corporate rescue practitioner for the Cold Storage Company in December, to examine Boustead Beef’s current operations and establish whether or not it has capacity to revive CSC and advance the Livestock Growth Plan.
In a statement issued on 18 December but published in the Sunday Mail yesterday, Masuka said Kudenga should examine investments made by Boustead Beef since it entered into a joint venture agreement with the government on 22 January 2019 and operational initiatives it implemented since the signing of the agreement.
Boustead Beef, which was touted as a British investor ready to pour in US$130 million into the ailing beef parastatal, failed to implement the agreement leading the government to seek judicial management of the company to save it from collapse.
Under the joint venture agreement signed in 2019, Boustead Beef was supposed to:
- 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.
It was also supposed to:
- increased capacity utilisation at CSC ranches and abattoir plants;
- increased prospects for restoration of the enterprise’s viability and higher throughput;
- stemming of further deterioration of equipment which is currently lying idle, and the growth of the local livestock and beef industry.
According to the agreement Boustead Beef was supposed to invest US$45 million in the first year 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
Nothing of the sort happened. Instead the CSC shut down operations in September and has not re-opened since. It fired most of the managers and was in the process of retrenching 140 workers.
Masuka said Kudenga will head the CSC rescue plan and as such will have overall responsibility to avoid the liquidation of CSC while ensuring that it remains in a solvent state for the benefit of the company’s stakeholders, creditors including the company’s workers.
“The objective is to avoid liquidation and bring CSC back to profitability and contribute to the Livestock Growth Plan and National Development Strategy 1,” he said.
Kudenga’s task will be to:
- to investigate the company’s affairs, business and property and financial situation in terms of Section 134 of the Insolvency Act;
- investigate previous CSC operations and expose the weaknesses within the systems and recommend possible solutions;
- investigate adherence to corporate governance principles and recommend aspects that require strengthening;
- confirm the number and status of the properties and ascertain the status of all CSC assets;
- investigate claims of asset stripping or any other activities and institute measures to stop the asset stripping immediately;
- examine the Scheme of Arrangement and recommend appropriate measures;
- investigate the employment and dismissal of employees from the date the Joint Venture was signed;
- examine and recommend Pension benefits due to the employees;
- examine Boustead Beef (Pvt) Ltd’s current operations (investments made and operational initiatives implemented since the signing of the agreement) and establish whether or not it has capacity to revive CSC and advance the Livestock Growth Plan.
Workers claimed that Boustead Beef did not have any money and was instead using money from rental of CSC properties to pay workers and even sold some assets.
It also sold more than 200 CSC cattle at an auction three months ago. It is not clear what the money was used for but workers believe the company wanted to pay off those who were being laid off.