Monday, 5 April 2021

WHAT HAPPENED TO THE CSC UK INVESTOR

CREDITORS of the defunct Cold Storage Company (CSC) are concerned about whether the joint venture agreement between the Government and a United Kingdom investor, Boustead Beef still exists or has fallen through.

This emerged during the company’s first creditors’ meeting under interim corporate rescue held in Bulawayo last Wednesday after Boustead Beef, through their representative Mr Nick Havercroft, represented his organisation as a creditor.

In January 2019, the Government through the Ministry of Lands, Agriculture, Fisheries, Water and Rural Resettlement entered into a 25-year joint venture agreement with Boustead Beef.

However, during last week’s meeting where the former CSC interim corporate rescue practitioner, Mr Ngoni Kudenga of BDO Zimbabwe Chartered Accountants presented his report, before his rejection by creditors, Boustead Beef presented themselves as a creditor whom CSC owed ZWL$3,2 billion.

The debt was provisionally accepted during the creditors’ meeting that was presided over by the Master of High Court, Mrs Rose Dube.

“Now that you (Mr Kudenga) are taking control of management and Boustead Beef’s position in that joint venture agreement that takes over operations at CSC, has that agreement been altered or qualifying Boustead Beef not as an investor because there is nothing relating to the investor that has been mentioned in that report,” said CSC former workers representative, Mr Ishmael Muzuru.

Mr Kudenga who was appointed CSC interim corporate rescue practitioner by Lands, Agriculture, Fisheries, Water and Rural Resettlement Minister, Dr Anxious Masuka last year, was rejected by the creditors following a High Court challenge by CSC former workers who were represented by Mr Dumisani Dube of Mathonsi Ncube Law Chambers.

During the meeting, the creditors voted in favour of Mr Vonani Majoko of Majoko and Majoko Legal Practitioners as the new interim corporate rescue practitioner.

The ex-CSC employees argued that because of his close relationship with Minister Masuka and previous relationship with CSC, Mr Kudenga’s appointment presented a conflict of interest and thus someone “independent and credible” should take over.

Minister Masuka placed CSC under reconstruction last year and Mr Kudenga was mandated with the overall responsibility of avoiding liquidation of the parastatal while ensuring it remains in a solvent state for the benefit of the company’s stakeholders, creditors including the company’s workers.

Another creditors’ representative said: “Your interim report to us, it looks like it’s denying the existence of a legal document (joint venture agreement), the shareholder (Government) is saying that the joint venture agreement has not been invalidated, but in your report, there is no mention of how you are working with this investor (Boustead Beef) to resuscitate CSC.”

Given the above context, the creditors said this implies that the two entities were independent of each other despite committing themselves into an agreement to resuscitate operations at CSC.

Among others, CSC creditors included urban councils such as Bulawayo City Council, Chinhoyi Municipality and Gweru City Council as well as the Zimbabwe Electricity Transmission and Distribution, and the National Social Security Authority.

The creditors said Mr Kudenga seemed to have general knowledge of the assets CSC has and did not know how much Boustead Beef has invested into the parastatal.

 

A legal officer from the Ministry of Lands, Agriculture, Fisheries, Water and Rural Resettlement, Ms Chenayi Garise, said as far as they understand the CSC-Boustead Beef agreement was still in place.

“As far as we understand, the joint venture agreement is still in existence and binding. Boustead Beef has not come to us to say the deal is no longer in existence,” she said.

The joint venture agreement is a US$400 million deal between CSC and Boustead Beef. Under the arrangement, the investor is required to inject a minimum of US$130 million over five years for the revival of operations at CSC.

During the proceedings and before the voting was done to elect a new interim corporate rescue practitioner, the Master of High Court requested Mr Kudenga to investigate why Boustead Beef presented themselves as a creditor, that information he was supposed to present at the next meeting had the creditors ratified him as the corporate rescue practitioner.

Under the joint venture agreement, Mr Kudenga said, CSC assets still belonged to the parastatal.

“The information is there and the assurance is that the assets still belong to CSC,” he said, during the meeting.

Mr Kudenga told the creditors that during the short time they have worked together with Boustead Beef, they had “problems” which needed to be looked at.

“Within the short time that we tried to work together, we had problems and it’s an issue that still has to be looked at.

“If you look at some of the terms that have been given to us, the issue of Boustead Beef agreement . . . ,we are supposed to look at the agreement and also verify the investment that was put by Boustead Beef,” he said.

“And at the end of the day, also look at the recommendations whether to continue or to modify the way we are going to work together…so, we still have to look at the agreement with Boustead Beef.”

In an interview after the creditors’ meeting, Mr Muzuru expressed gratitude over the latest development saying it was their hope that the new interim corporate rescue practitioner moves with speed to ensure they are paid their dues which are long overdue.

“We are happy because we wanted someone who is independent and credible. It’s us who have instructed Mathonsi Ncube law firm to actually challenge this because of the interest harboured by the one who was going to be appointed as the corporate rescue practitioner.

“We are expecting that he (Mr Majoko) comes in very soon and assist because the workers have suffered for a long time,” he said. Chronicle

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