eBusiness Weekly
Business Writer
Early this year, most local media outlets were flooded with stories about the reopening of the Cold Storage Company (CSC), the defunct state-owned meat processor.
The reopening was to coincide with the Zimbabwe International Trade Fair (ZITF) held at the end of April in Bulawayo, Zimbabwe’s second-largest city where CSC is headquartered.
Until July 7, 2022, CSC was under corporate rescue proceedings secured in December 2020 after the UK-based investor, Boustead Beef which entered into a 25-year joint venture agreement with the Government in January 2019 to revive the company filed for corporate rescue after some creditors sought to file for liquidation.
Ngoni Kudenga, of BDO Chartered Accountants was initially appointed corporate rescue practitioner before he was disqualified on the basis that he was conflicted.
Kudenga was disqualified by Rose Dube (Additional Master) because of his previous association with Lands, Agriculture, Water, Fisheries and Rural Development Minister Dr Anxious Masuka. Kudenga is the president of Zimbabwe Agriculture Society while Dr Masuka was the CEO prior to his appointment.
Vonani Majoko was then appointed interim corporate rescue manager. Corporate rescue involves temporary supervision and management of the company by a corporate rescue practitioner, a temporary moratorium (relief) on the rights of creditors against the company, and the development of a plan to rescue the firm.
The reopening would have attracted a lot of attention given the status of the ZITF, the country’s largest trade and investment expo and would have probably given potential visiting investors a great amount of confidence about investing in Zimbabwe.
The ZITF is attended by potential investors around the world and the timing of the reopening would have certainly buttressed the “Zimbabwe is open for business” mantra.
“Overall plant refurbishment at the plant is now 85 percent complete,” CSC-Boustead acting managing director Reginald Shoko said in a press interview in January 2022.
“The plant will be resuming operations in early April. We have managed to attract skills back home.”
CSC sought to give credence to the reopening of the firm, for the first time in nearly two decades, after it posted a video on social media of a cow in the slaughter room captioned “one-two testing”, and this was largely presumed the former regional meat giant was certainly coming back to life.
It turned out not to be. At least four more months were needed to re-start operations at its main Bulawayo abattoir.
Now a few weeks away, the rescue practitioner is booted out for incompetence on allegations he has failed to come up with a turnaround strategy.
The High Court ordered the removal of Majoko following an application by Boustead.
“Vonani Majoko is hereby removed as corporate rescue practitioner for the Cold Storage Company with immediate effect,” said the High Court on its July 7, 2022 ruling.
In its application, Boustead said Majoka had become unsuitable to act as corporate rescue practitioner for CSC as he had been incompetent and failed to perform his duties.
“He failed to cause the corporate rescue plan to be published within 45 business days after the date on which he was appointed.
“He failed to consult with creditors, other affected persons, and the management of the Cold Storage Company and thereafter prepare a corporate rescue plan for consideration and possible adoption.”
“He failed to convene and preside over a meeting of creditors and any other holders of a voting interest for the purpose of considering the corporate rescue plan.”
Boustead said due to the absence of the corporate rescue plan, Mr Majoko “is not aware of all the material assets of the company, as well as knowledge on which assets were held as security by creditors when the corporate proceedings began.”
Boustead said the corporate rescue proceedings were not permanent as they were a measure for the temporary supervision of a financially distressed company to bring it back to viability.
“It has been over 12 months since the first respondent was appointed Corporate Rescue Practitioner for the Cold Storage Company. During this time, the first respondent has not paid any attention to his duties and obligations as corporate rescue practitioner. His actions are defeating the objectives of corporate rescue,” Boustead pointed out.
The basis for the application seems to point out that there hasn’t been much progress at CSC and it might take a bit longer to get CSC back on its feet.
“For the umpteenth time, they have missed their own targets, and now with revelations about lack of progress during the tenure of Majoka, it means there has not been much rehabilitation work,” said Tino Ruredzo, an analyst with local research.
“The reopening of timelines has shifted on several occasions; imagine you are told that the plant refurbishment is 85 percent complete and six months later, you get the impression that nothing is happening; (it shows) we have been misled,” added Ruredzo.
Carlos Tadya, a local analyst said the Government needed to relook at the joint venture agreement.
“They cannot afford to relax when it is clear that there is no traction,” said Tadya.
The Government needs to be very bold and clear. I am sure the agreement has some provisions which provide an opportunity for aggrieved investors to seek redress.”
Shoko was not immediately available for comment by the time of publishing.
