CFI Holdings mainstay subsidiaries — Crest Poultry Group, Agrifoods and Manicaland Farmers Co-op (Pvt) Ltd — could soon be placed under the care of a judicial manager as the company struggles to stay afloat, businessdigest has established.
According to papers filed at the High Court on Wednesday, the companies have been facing viability challenges after failing to access new borrowings to sustain and scale up operations.
The capital constraints have seen the companies failing to pay creditors.
The firm has been heavily affected by high cost of borrowings, sub-optimal operating levels and relatively inefficient production infrastructureas as well as high overheads, leading to declining revenues and losses.
The poultry business comprises Glenara Estates, Hubbard Zimbabwe, Crest Breeders International, Suncrest Chickens ,Agrifoods and Agrimix.
In his founding affidavit, CFI acting Financial Director Chesternoel Mutevhe said Reggie Saruchera has been appointed as the provisional judicial manager.
“The applicant has been coming under increased pressure from creditors some of whom as indicated above have instituted legal proceedings and obtained judgment. The company’s assets are therefore at the risk of being attached and sold into execution. There is likelihood that an uncontrolled run of asset grabbing by creditors may take place,” reads the Mutevhe’s affidavit.
In the letter, Mutevhe said the directors of the company took a view that problems bedeviling the company could be overcome if the firm is placed under judicial management.
Agrifoods operates two mills in Harare and Bulawayo with an installed capacity of 20000 metric tonnes per month.
CFI holdings subsidiaries have since the introduction of the multi-currency system been operating at optimal capacity averaging at 24% per annum with a break-even capacity of 45% per annum.
Due to the low capital position of the company, it could not buy raw materials on credit and procured on cash, Mutevhe said.
Lack of capitalisation to address this affected factory inefficiencies due to lack of proper maintenance and automation.
“Due to its loss-making position and the overall state of the Zimbabwean economy, the company was unable to pay higher than market salary and wage rates and subsequently lost skilled personnel to new competitors as well as to foreign companies,” Mutevhe said in the application letter.