Pioneer moves to tame debt

Roadwin Chirara

LISTED transport concern, Pioneer Corporation Africa (PCA), is planning to recapitalise operations to reduce its operational debt.



ca, sans-serif”>The company’s financial position saw its operations during 2004 being heavily financed from funds borrowed under the central bank’s productive sector facility.


Its borrowings for the 2004 saw the company incurring as much as $22 billion in net interest charges. The bulk of the amount, totaling $16,7 billion, was incurred in the first half of the year under review.


PCA finance director, Patrick McCosh, confirmed that the company was planning to recapitalise its operations, but refused to shed light as to what method the group was going to follow in its efforts.


“We are planning to do so but as you know we are a listed company and this does not allow me to say much without following certain procedures,” said McCosh.


Pioneer, which is heavily involved in transport logistics, saw its planned fleet replacement and refurbishment being negatively impacted on by increased costs of borrowing, a position which outgoing chairman, Hamish Rudland, confirmed in the company’s annual results to December 2004.


“Fleet replacement and refurbishment in 2004 was minimal given the harsh interest rate environment,” he said.


The company is said to have implemented a rationalisation exercise where it split its operations into four divisions to reduce operational costs.


“This has simplified the business model and highlighted areas for cost-reduction across the group as more synergies are exploited,” he said.

He said the company was working towards reducing its debtor’s figure, which currently stands at $31 billion, up from $16 billion.


Rudland said the company’s passenger business was promising as the unit has managed to record significant growth in the year under review.


“The future for this division looks promising given the increase in cross-border trade and untapped routes,” he said.


However he said the trucking and logistics business was facing serious challenges largely due to the fixed auction rate and delays at the country’s entry points.


Rudland said the company was not going to pay out a dividend as part of its debt restructuring plans.


“As stated in previous communications, the board does not intend to pay a dividend at this time, in line with the strategy of growth and debt reduction,” he said.


PCA was created after the merger of Clan Transport and Pioneer Transport with its major shareholders being Holdsworth Holdings (Pvt) and Mansworth Holdings SA.

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