CSC new investors bullish about future

Boustead Beef, the company working on reviving the Cold Storage Company (CSC), says while the process seems to be slow, it is optimistic some of its meat processing facilities will re-open before the end of this year.

A combination of several lawsuits, unclaimable assets, labour disputes and disruption in global supply chains due to Covid-19 have delayed the re-opening of CSC, which used to be among the country’s biggest beef exporters before the turn of the millennium.

CSC is wholly owned by the Government of Zimbabwe.

Boustead entered into a 25-year joint venture agreement with Government in January 2019 to help revive the company under a US$400 million deal but immediately filed for a business rescue to shield its assets from being attached by creditors.

Vonani Majoko of Majoko and Majoko Legal Practitioners was in April this year voted for by creditors to become the interim corporate rescue practitioner after Ngoni Kudenga of BDO Zimbabwe Chartered Accountants, who the Government, through the Ministry of Lands, Agriculture, Fisheries, Water and Rural Resettlement had appointed, was disqualified by the Master of the High Court on the basis that he was conflicted.

Kudenga, who needed creditors’ endorsement, was disqualified by Rose Dube (Additional Master) because of his previous association with Lands, Agriculture, Fisheries, Water and Rural Resettlement Minister Dr Anxious Masuka.

Kudenga is the president of Zimbabwe Agriculture Society (ZAS) while Dr Masuka was ZAS chief executive prior to his appointment as minister.

Boustead consultant Reginald Shoko said in an interview this week, phase one of plant rehabilitation of the Bulawayo factory mainly involving repairs of compressors was almost complete. The second phase will entail installation of a new condenser being built in China.

“We have done a lot in terms of rehabilitating the plant guided by the engineering report done by experts,” said Shoko during a site visit to the plant this week.

“On major works, we have rebuilt three compressors out of five and in the next few days, our engineers will be done with the other two. The compressor room is the heart of this plant. We are also expecting to take delivery of a condenser from China…we are confident by the end of year; this plant will be up and running again.

Shoko admitted the new investors had missed the initial timelines for re-opening the plant, arguing the investor had to “navigate some unforeseen hurdles” which were being dealt with.

“We might have missed our targets because of certain things that we never saw coming but we are on track.

CSC had enjoyed monopoly status since 1937 when it was formed. But the Government deregulated the industry in 1992, which resulted in serious competition from private players, plunging CSC into a viability crisis following sharp decline in cattle throughput.

A year later, the company had lost 50 percent of its market share to private players.

The Government could have overlooked the implications of liberalising the industry when CSC had not been financially capacitated to withstand competition from the private players.

Since 1992, CSC largely survived on European Union exports and had a US$15 million revolving payment facility with the bloc. The facility was discontinued after the European Union suspended imports in 2001 following an outbreak and foot and mouth disease.

CSC had an annual quota of 9 100 tonnes, representing 8 percent of the export market and used to earn at least US$45 million per year from the European Union export quota.

Efforts to enter Asian markets did not succeed after some food safety standards concerns were raised.

In preparation for re-opening the plant, Mr Shoko said Boustead-CSC would come up with incentives to ensure constant supplies of cattle for communal farmers.

He said the company would construct some feedlots at dip tank sites across the country where farmers can deliver their animals for a 90 day feeding scheme before slaughter.

“We have also secured cows from Botswana and Namibia while at the same time, we will embark on programmes to beef up the national herd to guarantee supplies,” said Shoko.

In terms of the markets, he said “we are sitting on good” export orders with countries such as China, Angola, the DRC, Egypt and Lithuania having expressed interests.

He said there would be a major shift from the old business model which will see the company venturing into other “profitable” agriculture related activities such as poultry.

CSC, which owns four abattoirs used to employ 1 500 permanent workers and an average 700 casual workers, making it one of the biggest employers in the country.-ebusinessweekly.c.z