FORMER Delta Corporation CEO Joe Mtizwa is believed to have muscled his way into Starafrica culminating in his recent appointment to the company’s board and the ouster of CEO Patison Sithole and chief operating officer Tendai Masawi.
Well-placed sources said Mtizwa would most likely get the chairmanship of the group as the majority shareholders seek to restore shareholder value.
The sources said Mtizwa’s success in the fast-moving consumer goods sector and knowledge of both retail and distribution, gained over 30 years at Delta, made him an ideal candidate to assume leadership on the Starafrica board.
He has knowledge of the standards required for sugar, particularly the bottling sugar that Delta uses at its plants.
Speaking at the Delta AGM last week, CEO Pearson Govero said local bottling sugar remains a challenge as it does not meet the required standards even though the country produces enough raw sugar.
The market is rife with speculation Mtizwa will be made executive chairman, but this is unlikely as the Securities Commission of Zimbabwe regulations do not allow an executive chairmanship role.
Starafrica’s share price has in the past weeks rallied to a year-to-date gain of 33% to US1,2 cents from a 52-week low of US0,4 cents (based on Wednesday’s prices). More than 2% of Starafrica’s total issued share capital has been snapped up on the market in recent weeks.
Mtizwa is believed to have bought the shares to consolidate his position in the group.
He refused to comment, referring all questions to the company secretary.
Analysts say Sithole’s ouster was looming after he failed to turn around the fortunes of the company following the US$20 million capital raising, which Nssa bought into at US12 cents while the market was paying US10 cents.
Most market valuations had the price at US7 cents. But Nssa says the deal was above board.
After the US$20 million rights issue in March 2009, Starafrica continues to struggle with obsolete equipment, old fleet for its transport division –– Blue Star and West Beverage.
Its debt position worsened further with the group exceeding its borrowing limit of US$10,8 million. The group has been unable to recapitalise the sugar operations with the money raised.
Starafrica has had to do fire sales in order to fund operations.
They disposed of Red Star Holdings, West Bev limited, Arthur Garden Engineering and Marathon Tyres as well as selected entities under Silver Star Properties including the Borrowdale Road head office, which was sold to Nssa.
The group’s full year results to March 31 2011 were delayed after Starafrica asked for an extension amid speculation auditors were refusing to sign-off the March year-end accounts.
The company posted a loss of US$8,4 million during the period compared to US$17,1 million in the previous year.
Loss from continuing operations amounted to US$6,2 million compared to US$7,4 million in the previous year while loss from discontinued operations reduced to US$2,2 million against US$9,7 million recorded in 2011.
Finance costs were US$4,6 million compared to US$5,7 million.
In contrast, fellow sugar producer Tongaat Hulett (Hippo) is currently trading profitably.
Production at GoldStar Sugars Harare was 55 928 tonnes compared to 46 515 tonnes in the prior year, an increase of 20%.
The group said production at the plant was hampered by the age of the plant, which is in the process of being upgraded as well as Zesa power cuts.