Kuipa told businessdigest on Tuesday that his group would sell part of its shareholding in subsidiaries and use the proceeds to eliminate a US$12,5 million short-term debt.
Although he would not be drawn to name the investors citing confidentiality agreements, he affirmed they were foreigners.
“There are three companies that are currently doing due diligence examinations while there are two others that have signed Non-Disclosure Agreements. Of the three, two are eyeing the poultry division,” said Kuipa.
CFI operates a milling division, Victoria Foods, while its poultry division cuts across hatching and breeding.
“The rationale of the transaction would be to reduce debt and plough some of the money to do value addition,” said Kuipa.
Kuipa said the group had completed the sale of a 10% stake in Beira Grain Terminal but awaited regulatory approval, saying an announcement would be made in due course. The sale of irrigation business ––Dore & Pitt –– was almost complete. However, CFI had turned its back on the decision to sell its 45% stake in Maitlands, opting instead to complete the third and last phase of development on the land.
Zimre Property Investments owns 35% in Maitlands while the Philip Chiyangwa Family Trust owns a 20% stake.
Said Kuipa: “We will not be disposing of Maitlands. The board resolved that we would raise money and develop the land. We will be working on the third phase and we had already put infrastructure for the first and second phases.”
CFI turnover for the full year to September 2011 grew 34% to US$98 million but the growth did not stop the group from reporting a US$5,5 million loss. The company’s volumes growth was helped by improved capacity utilisation in some of its operations.
Its poultry subsidiary contributed 48% to the bottom line, the specialised division 24 % while the retail division chipped in 28%. However, high finance charges also ate into the group’s bottom line. In a statement attached to the results of the company, CFI chairman Simplisius Chihambakwe said 2011 was a tough year.
“While efforts to grow revenues were reasonably successful, group performance was hampered by ageing infrastructure in poultry, overall three percent decline in margins and increase in finance costs,” he said.
Agrifoods reported a 39% growth in volumes to 79 998 tonnes from the prior year.
Volumes and profitability rose, buoyed by an increase in demand, the company said.
Hubbard Zimbabwe, the group’s chick breeding unit, sold 11 million chicks from 8,5 million chicks in the comparative period last year, despite strong competition in the day-old chicks business.
Glenara Estates continued to produce hatchings for Hubbard Zimbabwe and broiler chickens for Suncrest Abattoir. CFI said Crest Breeders largely produced eggs after broiler production was terminated in the first half of the year due to water shortages and obsolete infrastructure. Egg production capacity rose to 60% from 33%, the company said. Production at Suncrest Chickens rose 10% but profitability was hindered by ageing plant and high input costs driven by rising soya and maize prices.
The company said margins, largely under pressure in the financial year under review, were worsened by cheap imports of dressed chickens. The company hopes a US$1 million invested in modernising Suncrest’s equipment will impact favourably on the operations.