DISPOSAL of starafrica's non-core assets has been hamstrung by acute liquidity conditions pervading the economy, chief executive Dr Sam Mushiri has said. starafrica has resolved to engage an independent professional adviser to speed up the disposals. The firm seeks to raise US$20 million to recapitalise its operations.
But it has only sold a few assets and raised US$10 million -- half of the target.
"Management is in the process of identifying an independent professional adviser to assist with the disposals," he said.
This comes as the company requires a huge dose of fresh funding to rejuvenate operations, return to profitability and guarantee its survival as a going concern.
starafrica has posted persistent losses in the last three years, including the US$8,4 suffered in the year to March 31, 2012.
These have eroded equity to a point where there was a US$10,8 million mismatch between assets and liabilities, which shareholders had to approve last week.
Current liabilities had exceeded assets by US$8,5 million by March 2012 compared with US$1,9 million over the same period last year.
The group has been disposing of its non-core assets to reduce working capital challenges, which have seen it struggle to clear arrears for a US$6,8 million raw sugar facility.
Assets that have been or are still to be disposed of include Red Star Holdings (West Bev), Arthur Garden Engineering, Marathon Tyres and selected assets owned by its subsidiary, Silver Star Properties.
The group could not find buyers for West Bev and Arthur Garden on mutually beneficial terms.
West Bev has now been placed under voluntary liquidation while negotiations for the sale of the engineering division continue.
starafrica also had interests in Tongaat Hulett Botswana, ZSR Transport, R. Chitrin and Bluestar Logistics.
In its annual report for the year to March 2012, starafrica said it had secured investors for a US$4,3 million plant upgrade of the Goldstar Sugar Harare refinery.
The firm would not disclose the investors, but said the funds would be deposited into a Special Purpose Vehicle.
"The project is expected to improve operational efficiency and reduce loss from 13 percent to 4 percent," the company said.
The plant is not operational due to raw sugar supply challenges after starafrica failed to clear liabilities under a revolving facility that it has with Hulett Tongaat Zimbabwe for the supply of the raw material.
Finance director Regis Mutyiri said that once the plant upgrade was completed and the raw sugar facility extended, the company would be able to meet its obligations.
"Right now, our refinery is closed because of raw sugar challenges. We suffered some losses because our facility with our raw sugar major supplier was (exhausted)," he said.
"With the work that we have done now, we are confident that if we get raw materials, we would run viably."
starafrica requires about 1 500 tonnes and 2 000 tonnes per week operating an average of production capacity of 40 percent.