Asset stripping concerns spoil CSC revival

THE defunct State-owned meat processor and marketer, the Cold Storage Company (CSC) has reportedly been stripped of assets resulting in the Government applying to place it under corporate rescue to avoid liquidation.

Formerly CSC, the Bulawayo-headquartered firm now called CSC-Boustead Beef Zimbabwe, last year secured Boustead Beef (Pvt) Ltd, a United Kingdom investor who has committed to inject a minimum of US$130 million over five years for the revival of operations, refurbishing industrial assets such as ranges, feedlots and residential properties.

In his founding Affidavit seen by Business Chronicle for case number HC1779/20, Lands, Agriculture, Water and Rural Resettlement Minister, Dr Anxious Masuka, outlined that Government, as a major shareholder in CSC, has entered into a Livestock Joint Farming Concession Agreement with Boustead Beef in which the investor has come up with a business implementation model.

The agreement, he stated, was now difficult to implement on account of creditors threatening to attach CSC assets while former employees had destroyed critical documents. CSC creditors include urban councils (Harare, Bulawayo and Chinhoyi), National Social Security Authority (NSSA), and the Zimbabwe Electricity Transmission and Distribution Company, are demanding immediate settlement of the arrears.

Dr Masuka stated that the Zimbabwe Asset Management Company, which falls under the purview of the Reserve Bank of Zimbabwe and created to mop up non-performing loans, had also threatened to sell CSC’s Bulawayo abattoir and the canning factory to settle a US$3,7 million debt.

“It also came to light that there in continues to be rampant corruption and unlawful dissipation of assets by certain executive members, board members, Government officials and respondent’s CSC official.

“More than 10 000 head of cattle have been misappropriated in the Government cattle heifer breed schemes.

“At the moment, the respondent (CSC) is only in control of approximately 25 percent of its assets,” said Dr Masuka.
Furthermore, he alleged that former board members and executives have corruptly allocated themselves, family and other individuals various ranges and homesteads, denying the investor access to CSC assets to refurbish, develop and restock.

Dr Masuka stated that it was clear that unless something is done, the noble intentions of the Government to revive the company would be quashed.

“To that end, it is the applicant’s prayer that the respondent be placed under corporate rescue proceedings.

“Certain of respondent’s employees have been extremely obstructive, and uncooperative in respect of applicant’s attempt to implement the aforesaid revival of the respondent,” said the minister.

“Their conduct has amounted to sabotage. The placement of the respondent under corporate rescue will have the effect of divesting these persons of their executive and management authority,” he said.

Ngoni Kudenga of BDO Zimbabwe Chartered Accountants has since been appointed interim corporate rescue practitioner, taking control of the CSC’s assets and business.

The CSC workers committee said as non-managerial workers, they were disturbed by the Court application made by Dr Masuka.

“The founding affidavit implied that workers sabotaged the Government’s efforts to revive CSC. We as CSC workers would want to put it on record that we were more than happy to have an investor even before we knew when an investor was coming. We were subjected to numerous measures to pave way for a smooth and comfortable take-over of whoever was to be brought in by the Government,” said the workers.

Sometime in 2017, CSC made an application before the High Court in Bulawayo under case number HC3099/17 seeking leave to convene meetings in terms of section 191 of the now repealed Companies Act (Chapter 24:03).

At the time CSC had liabilities of about US$33,1 million including outstanding salaries and wages as well as pension fund contributions amounting to US$4,2 million.

To show their cooperation to CSC resuscitation, for instance, the workers said they agreed and signed a Scheme of Arrangement to which NSSA used in conducting due diligence as the authority intended to invest in CSC.

“We were told we could not bargain our salaries as it would scare any investor coming due to a huge wage bill and outstanding salaries.

“We agreed in a staff council meeting to have a short time work arrangement meant to reduce the wage bill, which might have scared the investor.

“These are some of the cost-cutting measures among others we were subjected to and agreed upon as we waited for an investor,” said the CSC workers. — -chronicle.co.zw