The future of packaging manufacturer Nampak Zimbabwe (pictured) is hanging in the balance as the group is struggling to repay its shareholder and funder Nampak Holdings Pvt (Ltd) a huge of debt which has accumulated over the years.
By Melody Chikono
For the period ending September 30 2017, Nampak’s short-term borrowings were US$9,2 million related to a shareholder loan from the parent company and discussions were underway to roll over US$8,5 million. The parent company also owes an additional US$4,5 million in technical fees.
Total assets closed the period at US$122,5 million on high cash holdings of US$48,3 million from US$ 21,1 million in FY 16. This resulted in the company’s inability to pay foreign creditors a total of US$27,6 million.
The group is also facing problems in accessing foreign currency to pay for its raw materials. The company says it is not making meaningful headway in paying the debts.
At the company’s annual general meeting held on Wednesday, Nampak group managing director John Van Gend said Nampak Holdings is likely to scale back its support.
“The liability due to Nampak Holdings Limited and its subsidiaries has now reached a level that is not sustainable going forward and realistically they will have no choice but to scale back their support unless we can start to remit meaningful payments to them in the short term,” he said.
Van Gend said Nampak, which is the group’s major shareholder, continues to be very supportive of their extension of external credit for the Zimbabwe operations.
“Without their support I’m in no doubt that we would have to close some sections of our business. We continue to engage with relevant authorities to make them aware of our situation,” he said.
Besides the debt, Van Gend said the group was also struggling to regain control of its land holdings, despite the fact that they are protected under Bilateral Investment Promotion and Protection Agreements.
“These estates will be central in enabling us to support the tobacco industry’s stated position to move away from coal-cured tobacco to tobacco curing by renewable resources by 2020,” he said.
However, Van Gend said demand remains firm with turnover for the first quarter surpassing the previous year’s comparable period by 16%. The increase in uptake is being driven by a strong demand for beverage-related packaging and an upturn in its metals-related business.
“The restructuring and costs control exercise undertaken by the group in 2017 continues to bear fruit and our overheads are down on prior year by 3%. All units are currently evaluating options that will seek to address areas of capacity constraints and improve the product offering,” he said.