Business Writer
Starafrica Corporation creditors have acquired 89 percent stake in the company after converting the sugar processing firm’s $46,8 million debt into equity. The Zimbabwe Asset Management Company (ZAMCO) will have 58,54 percent of the firm’s issued share capital post debt conversion by all creditors.
ZAMCO is a Reserve Bank special purpose vehicle set up to acquire bad loans, owed by debt ridden private sector firms such as starafrica which have potential to turnaround, from banks for them to extend fresh loans.
State pensions entity, National Social Security Authority (NSSA) has acquired the second largest shareholding in the sugar processor at 31,63 percent.
The debt conversion option is in line with a secondary scheme of arrangement approved by shareholders in 2016 and sanctioned by the High Court.
Also, the reconstruction scheme was registered with the Registrar of Companies. starafrica said the debt conversion will reduce interest payable.
According to the company’s secondary scheme of arrangement, Starafrica owed secured and concurrent creditors more than $80 million.
In an update, starafrica Corporation said the debt would be converted at specific and pre-approved prices as set in the scheme document. Creditors will convert starafrica debts at 0,0125 cents per share.
The aforementioned debt to equity conversion will result in 4 195 063 188 starafrica ordinary shares, representing 89 percent of post conversion issued share capital being issued to concerned scheme creditors.
“The principal amount of debt converted to date represents approximately 70 percent of the principal amount of the secondary scheme debt.
“The benefits of the conversion will be felt from the next financial year going forward, given that the conversion took place at the just ended financial year.”
Financially, starafrica fell to a $1,3 million loss before tax in the half year to September 2017, which was 60 percent lower than the $3,3 million loss the sugar refiner suffered in the prior year comparative period.
However, turnover trended north, increasing by 63 percent from $14,3 million in the half of 2016 to $23,2 million in the same period the prior year.
starafrica, which is operating under a scheme of arrangement, saw its sugar sales increasing by 70 percent to 30 238 tonnes in the half year to September 2017 compared to 17 740 tonnes in the same period in 2016.
This resulted in group turnover increasing by 63 percent from $ 14,3 million in the half year to September 2016 to $23,2 million in the interim last year.
starafrica has been registering improved performance after upgrading its Goldstar Sugars refinery in Harare and the improved product uptake.
The new plant commissioning exercise has already resulted in the plant producing good quality sugar that meets the specifications of its customers.
starafrica has benefitted immensely from the Government restrictions on sugar imports, which were crowding out and threatening viability of local producers.
The company said this will go a long way in boosting sales of sugar to industrial customers. The cost reduction measures undertaken and a stable economic market for sugar will also result drive the firm’s profitability.
In his 2015 mid-term fiscal policy review, Finance Minister Patrick Chinamasa introduced a 10 percent custom duty plus $100 per tonne on imported sugar in order to curtail sugar imports as local producers had capacity to supply the local market and export the surplus.