STARAFRICA Corporation says it will ask shareholders to approve a US$10,8 million debt arising from borrowings above the company's limits. Chairman Mr Passmore Matupire said the sugar refinery and logistics firm would seek ratification of liabilities at the firm's next annual general meeting.
Mr Matupire disclosed the excess liabilities in a statement accompanying the company's financial results for the full year to March 31, 2012.
The Zimbabwe Stock Exchange-listed firm said the US$10,8 million debt it contracted was a consequence of the losses the company incurred.
"The group exceeded its borrowing limits as prescribed in the articles of association," he said. "This was a direct consequence of losses suffered by the group."
In the financial results for the period to March 31, 2012, starafrica indicated that its huge debt had contracted finance costs of US$2,7 million.
Starafrica said interest charges would be significantly lower next year after interest on critical loans was reduced while tenure was extended by two years.
Loss-making and debt-ridden starafrica has total current liabilities of US$24 million and has over the last few years struggled to achieve profitability.
The company has since last year been trying to raise about US$22 million to retire expensive debt, replace old equipment and meet its working capital needs.
In an attempt to raise fresh capital needed to turn around performance, the group embarked on disposal of non-core and loss-making operations.
Thus far, starafrica has managed to dispose of Red Star Holdings, while other assets earmarked for disposal - Arthur Garden Engineering, Marathon Tyres and other properties -- were ongoing pending good offers from buyers. But the sale of Red Star's listing on the ZSE is pending subject to the satisfactory conclusion of its issues surrounding its liabilities while the wholesale arm and R. Chitrin are under liquidation.
Starafrica said disposal of some immovable property, which raised US$8 million, was successful, considering the liquidity conditions prevailing in the economy. The disposal of West Bev resulted in a US$2 million loss.
In the 12 months to March 2012, starafrica saw revenue marginally increase to US$57,5 million from US$56,9 million over the same period last year.
But its loss position came down marginally from US$7,4 million the prior year to US$6,2 million while finance costs also fell to US$4,6 million from US$5,7 million over the comparative period last year.
Production at Gold Star sugars in Harare was 55 928 tonnes, compared with 46 515 tonnes in the previous year, which represented a 20 percent increase.
Country Choice Foods, also part of the food business of Starafrica, recorded US$83 000 profits from the US$730 000 achieved last year.
The group's industrial business posted an overall loss of US$1,3 million compared with the US$1,8 million loss the previous year to overshadow the US$575 000 operating loss transport concern Blue Star Logistics had achieved.