eBusiness Weekly
HARARE – Creditors of sugar manufacturing firm, Starafricacorporation, have converted a combined $48 million in a debt to equity deal, as part of implementation of the secondary scheme of arrangement.
The conversion is expected to narrow the interest which would have payable on the principal amount of the secondary scheme debt.
According to Starafricacorporation, the conversion will result in 4, 2 billion ordinary shares, representing 89 percent of the post conversion issued share capital of the company, being issued to the secondary scheme creditors. The shares will be introduced for listing on the Zimbabwe Stock Exchange before the end of this month.
“The principal amount of the debt converted to date represents approximately 70 percent of the principal amount of the secondary debt.
“The positive impact of the debt to equity conversion will be shown in the company’s financial statements for the year ended 31 March 2018,” said Starafricacorporation in a circular shareholders.
Its latest results for the half year to September 30, 2017, Starafricacorporation narrowed its loss after tax by 60 percent to $1, 3 million on the back of improved efficiencies, sales and cost containment measures.
The secondary scheme of arrangement was approved by Starafricacorporation’s shareholders on November 17, 2016, sanctioned by the High Court.
Consequent upon the conversion of, the Zimbabwe Asset Management Corporation Limited (ZAMCO) was the biggest shareholder with a 58, 54 percent stake followed by National Social Security Authority (NSSA) and Old Mutual Life Assurance Company Limited of Zimbabwe with a shareholding of 31, 63 percent and 1, 18 percent respectively, as at April 17, 2018.
In August 2013, Starafricacorporation concluded a scheme with its creditors and suppliers, which was sanctioned by the High Court and registered with the Registrar of Companies.
This initial scheme was put in place due to the severe working capital and solvency constraints faced by the company on the back of declining yields and lower quality of refined sugar from the Harare sugar refining plant which required significant upgrade.
Additionally, the company faced high competition from imports and a balance sheet burdened with the debt of liquidated subsidiary companies that Starafricacorporation had guaranteed.
