CFI shareholders are mulling a recapitalisation plan for the conglomerate, a shareholder said.
Hamish Rudland, whose consortium snapped up a 40% equity stake in Zimre Holdings Ltd (ZHL) recently, told businessdigest this week that the shareholders were looking at various options to recapitalise CFI Holdings Ltd.
ZHL is the largest shareholder in CFI Holdings.
“Our ambition is to recapitalise the CFI group through various instruments currently being worked on. The group has great Zimbabwean brands,” he said this week.
A traditional capital raising instrument would be to go for a rights issue.
Rudland said he wanted to see the group making a profit, but admits recovery will be slow.
“We aim to make the business profitable and pay dividends, if it is adequately capitalised through equity, there is no reason that is will not make profits. Recovery will be slow, but we will only make decisions and actions based on making profits,” he said.
Rudland said there was need to rationalise costs across the group.
“The group will need to right size its operations to the market we are servicing which is tough,” he said.
Rudland said the group’s operations were seriously affected due to working capital constraints. He however said the company’s plant and equipment and systems were still intact.
Rudland said the company could be turned around, adding he had confidence in the Steve Kuipa-led management.
“Yes definitely — no doubt, management is brilliant, systems are good, products are good, quality is great, they are only hamstrung by working capital, remember since dollarisation this group has not been capitalised by a single shareholder, they have had to survive on borrowing money to fund operations, which is unsustainable, any company no matter how strong would have eventually failed,” he said.
“The business also needs to continue to cost cut aggressively, but this will be part of the restructuring of the group. All subsidiaries are intact and offer a good product, however they need to be tweaked to adapt to market demands and quality.”
He added that his knowledge of logistics would make “this business” fly going forward.
CFI is seeking shareholders nod to ratify exceeded borrowing powers in FY14 and to borrow to a cap of not more than US$20 million in FY15.