Zimbabwe: CFI Says Langford Deal Reversal Efforts Ongoing

7 January 2022

CFI Holdings says proceedings to reverse the Langford Estates transaction sale at shareholder level, roughly six years since it was concluded, were still being reviewed by the relevant tribunals.

The transaction, which was consummated in 2015 involved a land for debt swap deal which saw Fidelity Life Assurance (FLA) assuming CFI's $18 million debt.

The liabilities entailed $16 million in bank debts and settlement of $2 million owed to creditors.

However, as a result of shareholder disputes at agro-focused CFI, Willoughby's Investments together with other shareholders controlling about 60 percent of CFI supported the reversal of the transaction.

"The legal proceedings remain pending before the relevant tribunals. The market will be updated with further progress in due course," Itai Pasi, the group's chairman said in the company's financials for the year ended September 30, 2021.

Willoughby Investments in 2017 requested an emergency general meeting (EGM) to reconsider the resolutions that approved the Langford transaction in 2015.

They noted that in the event the resolutions were not passed, a further special resolution would give directors authority to take action to cancel the disposal of an 81 percent share of Langford Estates to Fidelity Life.

Subsequent to the EGM, CFI would own 100 percent of Langford Estates, which comprises 834 hectares and is expected to yield 11 264 residential stands.

Fidelity intended to construct about 11 500 high density residential stands at Langford with an estimated market value of $350 million.

The insurer believed that the acquisition of Langford Estate would strengthen its balance sheet and give it capacity to underwrite more business.

In addition to that, the project was expected to realise more than $200 million profit before tax.

Fidelity targeted to get at least 11 264 residential stands out of the land, and be a successor to the South View Housing project.

However, CFI Holdings alongside then acting chair Mr Pasi and Willoughbys Investments were taken to court by shareholders Stalap Investments (Pvt) Ltd, Zimre Holdings Limited and two others and the EGM was ruled null and void for lack of compliance with the Companies Act and the ZSE listing requirements.

Willoughbys Investments has since lodged an appeal of the judgement in the Supreme Court under Case No. SC 635/19, which appeal is yet to be determined.

Meanwhile, the CFI's financials show that historical revenues for the year increased by 308 percent, from $1,92 billion in the previous year, to $7, 83 billion, with the increase partly attributable to aggregate demand improvement during the period following a good 2020/21 summer cropping season and a better 2021 tobacco season.

The group registered an average 80 percent increase in volumes sold in most of its key product lines. Victoria Foods was consolidated during the period following its exit from judicial management.

Retail Operations contributed 91,4 percent whilst milling operations (Victoria Foods) contributed 4,9 percent, and farming operations accounted for 3,7 percent of the Group turnover.

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