CSC to go under reconstruction

THE Government is considering placing the Cold Storage Company (CSC) under reconstruction in order to bring the entity back on its feet as it is taking long to resuscitate the entity.

The reconstruction model allows the company to recover outside of the risk of litigation by various creditors similar to what is happening to Hwange Colliery Company Limited.

Despite securing an investor in November 2018 from the United Kingdom, Boustead Beef, to revive CSC and help clear an outstanding US$36 million debt, the process seems to be taking long.

In an interview last Friday, Lands, Agriculture, Water and Rural Resettlement Minister Dr Anxious Masuka said Government was determined to make sure CSC plays a key and central role in ensuring that the livestock sector once again becomes vibrant as farmers find a market that is fair.

“In terms of progress (with regards to revival of CSC), we all know that the expectations have not been met,” he said.

“What we have now done is to ask that CSC goes into reconstruction and this week (last week), the matter is now before the courts (High Court in Bulawayo) to ensure that we start the process of reconstruction and that gives us the three months that is required to ensure that we re-evaluate CSC and determine the best way forward.

“But the Government has taken this step to ensure that CSC is thoroughly restructured so that we get CSC to perform its central role in terms of livestock development,” said the minister.

Dr Masuka said the country’s largest beef processor and marketer was key in the Government’s plan to resuscitate rural livestock.

“It used to play a critical role in ensuring it provided markets. I think it was on a monthly all round but now it’s making it very difficult for people (farmers) to sell as CSC is operating at about 10 percent capacity,” he said.

CSC has, for close to 20 years, faced operational constraints. Last year, Boustead Beef Zimbabwe committed itself to a massive capital injection of US$400 million to be spread over five years.

At the time of the announcement, machinery worth about US$16 million had been procured and was awaiting delivery to the company’s headquarters in Bulawayo. The company had also started repairing key infrastructure at CSC ranches.

Asked if the reconstruction of CSC implied that Boustead Beef has failed to rejuvenate CSC, Dr Masuka said:

“No, the reconstruction does not mean that the investor is failing. The circumstances are such that, as thought, you cannot deliver the outcome, so we need reconstruction. “Reconstruction simply allows that creditors must move out, we bring in a manager who evaluates the business and says what we have agreed is it the best framework to take the operation forward or not because of the delays that have happened.”
Boustead Beef was being financed by various investors from the United Kingdom, America, Switzerland, Hong Kong and Australia, all having shareholding in the business.

The company was also putting in a US$3 million state-of-the-art Information Technology system for the whole process from the farmer right through to the product on the shelf.

CSC’s Bulawayo complex is the largest meat slaughtering facility in Africa and only trails Botswana Meat Commission in terms of the latest technologies. The company has set sights on purchasing a huge fleet of trucks for the collection of cattle as well as refrigerated trucks to ferry carcasses for export.

At its peak, CSC handled up to 150 000 tonnes of beef and associated by-products annually and exported to the European Union, where it had an annual quota of 9 100 tonnes of beef. The company used to earn the country about US$45 million per year. —chronice.cozw