SOMETIME in December 2020, the Government moved to avert the liquidation of the Cold Storage Company (CSC) by placing it under a corporate rescue plan in terms of the Insolvency Act while facilitating its revival.
Corporate rescue, also known as business rescue or judicial
management, provides temporary supervision of the company and of the management
of its affairs, business and property.
The model involves temporary moratorium (relief) on the
rights of claimants or creditors against the company or in respect of property
in its possession.
Despite its huge potential and glorious past, the
Bulawayo-headquartered giant has been struggling to sustain profitable
operations over the past years and faced the risk of liquidation as creditors
demanded their dues, which ran into millions of United States dollars.
In the face of mounting debts and accusations of poor
management and alleged corruption, among other factors, CSC slipped into
insolvency, amid escalating risk profile, which made it difficult to attract
fresh investment or working capital.
Now known as CSC-Boustead Beef Zimbabwe since 2019,
following the coming on board of Boustead Beef (Pvt) Ltd, a United Kingdom
investor who has committed to inject a minimum of US$130 million, the company
is still struggling to restore normal operations with the main plant in
Belmont, Bulawayo, remaining defunct.
While Boustead Beef investment was meant to unleash new
life into CSC by reviving operations, refurbishing industrial assets such as
ranches, feedlots and residential properties, stakeholders argue that progress
is very slow.
Some have further questioned the capacity of the investor
and suggested that the deal be reversed.
Justifying the corporate rescue path, Lands, Agriculture, Water,
Fisheries and Rural Development Minister, Dr Anxious Masuka, has said that it
was difficult to viably implement the Boustead Beef deal as different creditors
were threatening to attach CSC assets while former employees had reportedly
destroyed critical documents.
This saw Mr Ngoni Kudenga of BDO Zimbabwe Chartered
Accountants being appointed as the first corporate rescue practitioner for the
ailing giant beef processor. His stint was, however, short-lived as creditors
rejected him in April this year during a crunch meeting in Bulawayo, accusing
him of being allegedly compromised.
Mr Kudenga was then replaced by prominent lawyer, Mr Vonani
Majoko of Majoko and Majoko Legal Practitioners.
Since then, legal proceedings have ensued over the matter.
Business Chronicle recently met with Mr Majoko to seek detailed insight as to
what really was happening at CSC.
Mr Majoko admitted that amid these complications, different
stakeholders remain anxious as to what lies ahead of this strategic public
entity and whether or not it will be resuscitated?
Opportunities lying ahead for CSC
Mr Majoko said he was convinced the state-owned entity
could be transformed within a short time should pending legal and
administrative hurdles be promptly sorted.
“CSC can be turned around very quickly as it still has
several advantages that all of its competitors don’t have.
US$130 million is too big as this does not require a lot of
money. You don’t even need US$20 million,” said Mr Majoko.
“CSC still has unique facilities both in terms of the
design, capacity and geographical spread and no other local competitor has
this,” he said.
“I’m referring to ranches, which are virtually in every
province and have adequate holding capacity to feed CSC abattoirs that are
found in Bulawayo, Masvingo, Chinhoyi and Kadoma as well as distribution depots
in places like Harare and Gweru.”
Mr Majoko said the existing CSC infrastructure network
remains fairly in good condition with the Bulawayo and Masvingo plans still
maintaining the European approved standards.
“A big part of CSC is also in terms of the range of
by-products like tallow for soap making, glue production and deboned meat,
which can help Zimbabwe substitute on imports,” he said.
“It’s the capacity to export regionally and internationally
that is awesome. As we speak there is appetite for a revived CSC to service new
bigger markets like DRC, Angola and Libya etc, outside of the narrow scope of
the traditional EU alone.
“We need to play along more on areas where we have
comparative advantage and one of these is the cold chain side, which is not
about meat but anything that requires bulk refrigeration. CSC should be able to
tap into this and service other industries.”
Mr Majoko said business enquiries from local and
international players were piling up as the market desires CSC presence.
How long should the market wait?
For Mr Majoko and his team, what is critical is the
refurbishment and restoration of the cold storage facilities at the giant
Bulawayo plant and not the feed stock.
“At this stage there is work being done to get the Bulawayo
abbatoir and cold storage facility functioning again.
“The cold rooms are being refurbished and my understanding
is that the compressors, which have not been working for the past 23 years, are
now up,” he said.
“Only a condenser unit that has been shipped from China and
other support materials to redo the facility are yet to be fixed, and take into
account that there is about 80km of piping that needs to be attended to.
“Feedstock is not a challenge considering that we have
about 5,1 million herd of cattle as a country and about 2,1 million are in
Masvingo, and 2,2 million in Matabeleland provinces and CSC facilities are
situated there.”
Prospects for working with the Botswana Meat Commission are
also high and promising, he added. Regarding lost human capital Mr Majoko said
there was sufficient knowledge and skill locally, adding that a revised CSC
would create more opportunities for former workers and new graduates.
Impact of indigenous
farmers
Following the successful land reform programme since 2000,
there are a lot of successful indigenous farmers who have demonstrated capacity
to produce good quality livestock, said Mr Majoko.
“Our engagements with them are very encouraging as well as with several local businesses that are keen to come on board in terms of stock feed supply and other inputs,” he said.
“These take into account climate change realities and areas
where we need to climate-proof CSC operations. Government is also doing a lot
in terms of livestock development, borehole drilling and dam construction in
communities, which will aid CSC revival.
“Our aim is not to push out our competitors but complement
them and be partners where possible so as to provide wider and competitive
service for others. Our infrastructure allows for such possibilities,” said Mr
Majoko. Chronicle
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