Blue Ribbon Industry (BRI) creditors have okayed a scheme of arrangement that will see Tanzanian firm Said Salim Bakhresa injecting US$40 million in the next five years to turn around the fortunes of the cash-strapped grain milling company .
Judicial manager Reggie Saruchera of Grant Thornton told a creditors meeting on Wednesday that Blue Ribbon Industries will by year end operate at full capacity, with the investor set to inject an initial US$18 million into the distressed firm.
”Mr Nigell Chanakira, who is chairperson of Zimbabwe Investment Authority, promised to give us the certificate today (last wednesday) to have Bakhresa invest in Zimbabwe. We have secured Reserve Bank of Zimbabwe approval as well,” said Saruchera.
“We waited for three‒and-a-half years and we were looking for a serious investor because BRI requires real money for it to take off. It needs farmers who supply the grains. At least US$10 million is required for raw materials only. So real money is required.”
Saruchera said the handover to the new investor would be done in the next month or two after sorting out conditions surrounding the grain supply agreement which was signed between BRI and Mega Market in June 2013.
Blue Ribbon was placed under provisional judicial management on September 5, 2012 under Saruchera of Grant Thornton.
Registration of bidders was done in February 2013 followed by selection of bids in May the same year.
Bakhresa won the bid ahead of Grindrod and Takura Capital after the companies bid price was adjudged far better than that of its competitors.
In June 2014 the judicial manager implemented the grain supply agreement with Mega Market to keep the brands alive.
Saruchera said the appeal to the Ministry of Indigenisation which commenced in May 2013 was only approved in May 2015.
Under the arrangement, Bakhresa will acquire the entire shareholding of BRI, at a purchase price of US$1, thus giving it full ownership of the company.
Through the arrangement, the Tanzanian conglomerate will inject US$18 million in the business with US$12 million covering liabilities and US$6 million going towards capital expenditure and working capital.
BRI’s liabilities were pegged at US$29,4 million.
Bakhresa will cover 90% of secured creditors that is PTA and FBC bank owed US$2,4 million and US$1,1 million respectively by BRI.
Atlas trading will only receive US$3 million against total liabilities of US$7,4 million owed to it by BRI.
The new investor will cover 62% of employee costs and 80% of statutory obligations which are pegged at US$696 million.
Out of US$7 million owed to ZB bank notarial general covering bond, the investor will pay US$2,3 million
Concurrent or unsecured creditors will be paid 15% of US$8,8 million.
Saruchera applauded Zimbabwe Revenue Authority for cooperating in the resuscitation of companies through leniency in the remodelling of tax arrears.
Shareholding in BRI comprises Orchadrian Enterprise ltd at 74%, Cereal International Ltd (16%) and the Employee Share Trust (10%).
The injection of fresh capital into the group will resuscitate its three wholly owned subsidiaries namely, Blue Ribbons Foods Ltd (BRF), Nutresco Foods Ltd and JA Mitchell Ltd.
BRI is the second largest food and milling company in Zimbabwe. BRF is the wheat and maize milling and stock feed manufacturing subsidiary of BRI, while Nutresco’s main line of business is the manufacturing of peanut butter, corn soya blend, and mahewu and soya chunks.
The bakery operations are housed under Mitchell.
Bakhresa Group is one of the leading industrial conglomerates in Tanzania and East Africa.
It started as a small restaurant in the port city of Dares Salaam, Tanzania, in 1975. It has emerged as one of the prominent family owned business groups in the region.
Bakhresa’s operations are spread across Tanzania, Zanzibar, Uganda, Kenya, Rwanda, Burundi, Malawi, Mozambique and South Africa.
The company provides employment to close to 10 000 people with various companies under its umbrella with investments primarily in the food and beverages, packaging, logistics, marine passenger services, petroleum and entertainment sectors.
The group has a grain milling capacity of 5 000 tonnes per day with the capacity to increase to 6 000 tonnes by year end.