HomeBusiness DigestGovernment takes over Zupco

Government takes over Zupco

Shakeman Mugari

GOVERNMENT has taken total control of the debt-ridden public transport firm, the Zimbabwe United Passenger Company (Zupco).

s-serif”>Investigations reveal that government acquired the 49% stake which belonged to stock market-listed insurance firm Zimre.

Under the billion-dollar deal government is now the sole owner of Zupco with 100% shareholding in the company.

Government has also taken over the company’s debt which is currently running into billions.

Officials familiar with the issue say Zimre’s disinvestment came on the back of Zupco’s perennial losses.

The Zimre board was also under pressure to disinvest from the social service sector because of lack of returns.

“It was felt that Zimre, being a public listed company, could not continue its investment in non- profit organisations like Zupco. There was need for investments that bring value to the shareholder,” said an official close to the deal.

It was not immediately clear how much government would pay for the 49% stake.

According to the deal government has agreed to pay Zupco’s $9,5 billion debt which the company has been battling to repay to its local and foreign creditors.

Zupco chief executive officer Bright Matonga confirmed this week that government now wholly owns the company.

“Zimre opted out and we are now working out the modalities,” said Matonga. “Government will take over the $9,5 billion Zimbabwe dollar debt plus amounts owed to the Metropolitan Bank.”

Zupco has been battling to service its mounting debt. The company has been on a slide since government took over with its fleet dropping from more than 1 000 buses to just over 100 at the moment.

Zimre’s chief operating officer Solomon Tembo confirmed the transaction but could not give details saying the matter was due for discussion at board level.

“The board is just about to meet now (Tuesday) to discuss the issue. We can only comment when we have discussed the issue as a board,” said Tembo.

Businessdigest understands that at the meeting Zimre board directors unanimously agreed to approve the disposal.

Zimre bought into Zupco when it was still a parastatal. Zupco is one of the parastatals that have been criticised by parliament for failing to produce annual reports.

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