BRITISH American Tobacco (BAT) Zimbabwe says it has registered its US$22 million legacy liabilities with the Reserve Bank of Zimbabwe (RBZ) as the company anxiously seeks to clear the debt off its books, businessdigest has learnt.
The liabilities comprise foreign dividends and other offshore payments. Zimbabwe’s private sector is saddled with external loans it has failed to service due to a crippling US dollar crunch, which has seen it reintroduce local currency and ban transactions in forex.
Treasury last month indicated it would use Brady Bonds to expunge approximately US$1,2 billion worth of external private sector legacy debts as Government moved to restore and increase investor confidence in the country.
Brady bonds are bonds that are issued by the governments of developing countries and are the most liquid in emerging market securities.
BAT acting managing director Stephen Nyabadza said the company was currently engaging the apex bank to access the US$22 million at 1:1.
“The company has applied for registration of its legacy liabilities made up of foreign dividends and other foreign payments with the RBZ in terms of the RBZ directive. From a long-term perspective, we are talking to our bankers and still looking at other possible options to ensure a forex steady flow to support the company’s current and future forex requirements,” Nyabadza said.
Meanwhile, the company registered a 14,6% increase in after-tax profit to ZWL$8,5 million from ZWL$7,4 million the previous year, for the half-year ended June 30, 2019 driven by the increase in revenue generation.
During the period under review, BAT recorded a 20% decrease on volumes buoyed by reduced consumer disposable incomes due to the economic hardship being experienced in the country.
Revenue grew by 48% due to price increase in order to cover increased costs, while gross profit increased by 61% to ZWL$23, 5 million from ZWL$14,6 million the previous year driven by positive impact of raw materials purchased at lower costs.