31 January 2013

Zimbabwe: Interfresh Deal Faces Collapse

The expropriation of part of horticultural concern Interfresh Limited's estate in Mazoe has thrown talks with a potential investor into jeopardy, with sources indicating that discussions to salvage collapse of an imminent deal were underway.

Sources indicated that senior management as well as directors had been busy over the past two weeks trying to convince politicians to help coax government to save the deal by persuading the First Lady, Grace Mugabe, into rethinking her decision to take-over a sizeable chunk of Interfresh's Mazoe Citrus Estates to expand her orphanage located close to the estate.

Sources indicated that Interfresh's potential suitors, whose identity has remained under wraps but are reliably understood to be domiciled in eastern Africa, were considering pulling out of talks which had advanced.

The Financial Gazette's Companies & Markets understands that Interfresh had courted the potential investors for an undisclosed amount of cash, which they desperately need to recapitalise.

The foreign investors were in the country last week, meeting regulatory authorities and seeking clarification over the land dispute after about 1 600 hectares of the Mazoe Citrus was allocated to the first family.

The amount of land lost is said to have a material impact on the company's revenue.

The Zimbabwe Stock Exchange(ZSE) -listed horticultural concern has lodged an appeal with the Ministry of Lands and Rural Resettlement to recover the land, but sources indicated they were unlikely to succeed.

Contacted for comment Interfresh's CEO Lishon Chipango requested questions in writing. He had not yet responded at the time of going to press.

In a statement this month, Interfresh confirmed losing land in Mazowe, saying the Lands Ministry had designated the property.

"Shareholders are advised that the Ministry of Lands and Rural Resettlement has advised the company that a portion measuring 1 599,7 hectares, which was part of Mazoe Citrus Estate, has been allocated to another party," said company secretary Tawanda Namusi.

In their statement, Interfresh said the portion allocated represented 46 percent of Mazoe Citrus Estate's total arable land, 30 percent of its budgeted revenue for the financial year 2013 and 52 percent of the value of immovable and biological assets.

Interfresh last year issued a cautionary statement announcing that an impending transaction which could affect its share price was under consideration.

This related to talks with the potential investors.

Interfresh, which narrowed its pre-tax profit to US$818 000 during the half-year ended June 30, 2012, from US$1,1 million during the same period in 2011, reported a considerable strain on working capital last year.

Apparently, a negative working capital position had driven the firm's hunt for fresh funding.

During the half year to June 30, 2012, current assets at US$5,5 million were about US$400 000 lower that the group's current liabilities, which closed the period at US$5,9 million.

Interfresh's revenue from continuing operations climbed by 27 percent to US$3,2 million, from US$2,5 million during the prior comparative period in 2011.

Interfresh is in the business of producing, processing and marketing agricultural, horticultural, agro-industrial and allied food products both for the local and export markets.

The company has three strategic divisions namely, Citrus, Flowers and Trading, each with a specific and autonomous area of focus.

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