HIPPO Valley Estates Ltd (Hippo) says it has paid $280 million to the High Court for interpleader proceedings against 20 commercial cane producers frustr
ating its efforts to declare much-needed profits.
In a notice dated July 1, Hippo told shareholders of the existence of a dispute on land ownership between some 20 commercial cane farmers and government as a result of the provisional orders by the High Court which overturned Section 8 orders served on these farmers.
The company said consequent upon the land ownership dispute, a further dispute had arisen as to whether payment for the cane delivered to the mill was due to the commercial cane farmers who asserted their entitlement on the basis of provisional court orders, or the A2 cane farmers who delivered the cane under their cane purchase agreements.
Hippo said it instituted interpleader proceedings on June 27 this year in the High Court to obtain a determination on the competing and adverse claims made in respect of the cane delivered to the mill.
“To date relevant papers have been served on all commercial cane farmers involved,” Hippo said. “Out of the 136 A2 farmers who are party to the dispute, only a handful have accepted service of the interpleader notices. Those served have not yet responded despite being legally required to do so.”
The firm said the delay in responding to the court notices was frustrating the early resolution of this dispute.
“To date some $280 million has been paid over to the High Court by the company in terms of the interpleader proceedings,” the company said. “Hippo Valley continues to engage all parties with a view to resolving this dispute but unfortunately thus far, no progress has been made in this regard. This already serious situation is showing signs of deteriorating further and urgent steps should be taken to resolve the dispute.”
Hippo said it however, continued to take delivery of sugar cane from both commercial cane farmers and the A2 cane farmers in terms of existing contracts.
“Payments for cane deliveries has been effected in terms of existing contracts in all cases where there is no dispute,” Hippo said. “All proceeds from disputed cane purchases will continue to be paid over to the High Court in accordance with the interpleader proceedings.”
Government’s price controls introduced late last year have seriously eroded profitability at Hippo resulting in turnover declining by 17% from $38,1 billion to $31,5 billion.
Former company chairman Len Bruce said due to the inability to match increased costs with commensurate price increases, operating profit declined by 71% from $6,8 billion in 2001 to $2 billion in 2002.
Furthermore, because the company’s profitability was severely impaired by price controls and the fixed exchange rate in the latter part of the year, it was necessary to impair fixed assets by a total of $11,3 billion.
Bruce said a monetary loss of $2 billion was incurred as a result of holding net monetary assets for a substantial portion of the year in a high inflationary environment.
Last year government acquired Hippo Valley North and Mkwasine Estate during its fast-track land resettlement programme.
Both properties were listed in 2000 and de-listed in the same year.
Hippo is capitalised to the tune of $81 billion on the Zimbabwe Stock Exchange.