ZIMBABWE – The much-awaited US$130million Joint Venture between the Zimbabwe state-owned meat processor, Cold Storage Company (CSC) and United Kingdom firm, Boustead Beef (Pvt) Limited has been terminated following raised concerns by the investor.
Zimbabwe’s cabinet had approved the deal in March last year that was going to recapitalise and revive the defunct state-owned meat processor through a Concession Agreement under Rehabilitate, Operate and Transfer (ROT) terms.
According to reports by New Zimbabwe, the decision to cancel the deal was revealed by Cabinet but it is yet to be officially announced.
The initial agreement had indicated that the investment was to be used to finance capital expenditures and working capital for the business and facilitate settling of CSC’s financial debts of about US$42 million and pay rentals of US$100 000 per annum during the first five years of the concession agreement.
Under the agreement, Boustead was to take over and manage CSC ranches in Maphaneni, Dubane, Umguza, Chivumbuni, Mushandike, Willsgrove and Darwendale for an initial period of 25 years.
In addition, Boustead was also to take over and run CSC abattoirs in Bulawayo, Chinhoyi, Masvingo, Marondera and Kadoma and manage its distribution centres and residential properties in Harare, Gweru and Mutare for an initial period of 25 years.
However, the deal has fallen through after Boustead expressed reservations about it following its due diligence.
It emerged that CSCs’ level of indebtedness had been grossly understated and that it had lost the majority of its assets while most of the facilities had become so derelict, they would be too costly to bring back to life.
The government agreed to terminate the deal in order to allow the rescue plan by the ministry of agriculture to go ahead without any other delay given the strategic nature of the company to the country’s economy.
At its peak, CSC used to employ over 5 000 people and would export beef to the European Union, a business that earned the country the much-needed foreign currency.
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