At one point in December 2020, the government decided to avoid the liquidation of the Cold Storage Company (CSC) by placing it under a corporate bailout within the meaning of insolvency law while facilitating its relaunch. .
Business rescue, also known as business rescue or judicial management, provides temporary oversight of the business and the management of its affairs, activity and property. The model involves a temporary moratorium (relief) on the rights of claimants or creditors against the company or in respect of property in its possession.
Despite its enormous potential and glorious past, the Bulawayo-headquartered giant has struggled to maintain profitable operations in recent years and faced the risk of liquidation as creditors demanded their contributions, which amounted to millions of US dollars.
Faced with growing debts and accusations of mismanagement and suspected corruption, among other factors, CSC slipped into insolvency, amid a growing risk profile, which made it difficult to attract new investments or working capital.
Now known as CSC-Boustead Beef Zimbabwe since 2019, following the arrival on board of Boustead Beef (Pvt) Ltd, a British investor who has pledged a minimum of $ 130 million, the company is struggling still to restore normal operations with the main Belmont plant, Bulawayo, remaining inactive.
While Boustead Beef’s investment aimed to breathe new life into CSC by reviving operations, refurbishing industrial assets such as ranches, feedlots and residential properties, stakeholders argue that progress is being made. very slow.
Some further questioned the ability of the investor and suggested that the deal be reversed. Justifying the corporate bailout, Land, Agriculture, Water, Fisheries and Rural Development Minister Dr Anxious Masuka said it was difficult to sustainably implement Boustead Beef’s deal because various creditors threatened to seize CSC assets while former employees reportedly destroyed critical documents. This saw Mr. Ngoni Kudenga of BDO Zimbabwe Chartered Accountants named the first business rescue practitioner for the struggling beef processing giant.
His stint was shortlived, however, as creditors rejected him in April this year at a crucial meeting in Bulawayo, accusing him of being allegedly compromised.
Mr. Kudenga was then replaced by a prominent lawyer, Mr. Vonani Majoko from Majoko and lawyers from Majoko.
Since then, legal proceedings have been initiated in this regard. Majoko recently gave a detailed look at what is really going on at CSC.
Mr Majoko admitted that amid these complications, different stakeholders remain anxious about what awaits this strategic public entity and whether or not it will be resurrected?
Upcoming Opportunities for CSC
Mr Majoko said he was confident that the public entity could be transformed in a short time if the outstanding legal and administrative hurdles were quickly resolved.
“$ 130 million is too much because it doesn’t require a lot of money. You don’t even need US $ 20 million, ”said Majoko. “CSC still has unique facilities in terms of design, capacity and geographic distribution and no other local competitor has that.
“I am referring to the ranches, which are found in virtually every province and have sufficient storage capacity to supply the CSC slaughterhouses that are located in Bulawayo, Masvingo, Chinhoyi and Kadoma as well as distribution depots in places like Harare. and Gweru.
Mr Majoko said the existing CCS infrastructure network remains in fairly good condition, with factories in Bulawayo and Masvingo still maintaining the standards approved by Europe.
“Much of CCS is also in the range of by-products like tallow for soap making, glue production and boneless meat, which can help Zimbabwe to substitute for imports,” he said. .
“It’s the ability to export regionally and internationally that is impressive. As we speak, there is an appetite for a rekindled CCS to serve new larger markets like DRC, Angola and Libya etc., outside the narrow framework of the traditional EU alone. We need to play more in the areas where we have a comparative advantage and one of them is the cold chain, which is not about meat but anything that requires bulk refrigeration. CSC should be able to exploit that and serve other industries.
Mr Majoko said requests for business information from local and international players were piling up as the market wanted CSC to be present.
How long does the market have to wait?
For Mr. Majoko and his team, what is essential is the refurbishment and restoration of the cold storage facilities at the giant Bulawayo factory and not the raw material.
“At this point, work is underway to put the Bulawayo slaughterhouse and cold store back into service,” he said. “The cold rooms are being renovated and I understand that the compressors, which have not worked for 23 years, are now in place.
“Only a condenser unit that was shipped from China and other support materials to redo the installation still need to be repaired, and take into account that there are around 80 km of piping that need to be repaired.
“The raw material is not a challenge given that we have about 5.1 million cattle herds as a country and about 2.1 million are in Masvingo, and 2.2 million in the provinces of Matabeleland and that the CSC facilities are located there. “
The prospects for working with the Botswana Meat Commission are also high and promising, he added. Regarding the loss of human capital, Mr. Majoko said there was sufficient knowledge and skills at the local level, adding that a revised CSC would create more opportunities for old workers and new graduates.
Impact of indigenous farmers
Following the success of the land reform program since 2000, there are many successful indigenous farmers who have demonstrated their ability to produce good quality livestock, said Majoko.
“Our engagements with them are very encouraging, as well as with several local companies who wish to join us in terms of supply of feed and other inputs,” he said.
“These take into account the realities of climate change and the areas in which we need to protect CSC operations against the climate. The government is also doing a lot in terms of developing animal husbandry, drilling wells and building dams in the communities, which will help revive the SCC.
“Our goal is not to crowd out our competitors but to complement them and partner where possible in order to provide a broader and more competitive service for others. Our infrastructure enables such possibilities.