BOUSTEAD Beef, a firm that is currently undertaking the revival of the Cold Storage Company (CSC), has so far pumped in US$24 million into the business, which is a complete violation of the Livestock Joint Farming Concession Agreement (LJFCA) signed in January 2019.
According to the LJFCA signed on 22 January 2019 by the government and Boustead Beef, the investor was supposed to raise and invest a minimum of US$130 million in the project over five years, being for both capital expenditure and working capital to run the business.
Total investment in year one was supposed to be US$45 million, broken down as follows: refurbishment of abattoirs, canning factory, distribution (US$6 million), working capital abattoirs, canning factory, distribution (US$5 million), logistical fleet, vehicles, distribution abattoirs (US$2 million), information technology systems or meat matrix or stock control (US$3 million), external cattle purchase facility (US$5 million), external buy-back facility for processed beef (US$5 million, capital expenditure ranches and feedlots (US$4.5 million), working capital ranches and feedlots (US$3 million) logistics fleet ranches, vehicles (US$1.5 million), cattle purchase (US$10 million).
But while officially re-opening the beef processing plant in Bulawayo on Thursday, Vice-President Constantino Chiwenga revealed that Boustead Beef has pumped only US$24 million into the business.
“I am reliably informed that to date, US$24 million has been invested to resuscitate the Cold Storage Company, which has been idle for the past 22 years,” he said in his speech.
According to the LJFCA, the CSC has a right to terminate the deal if Boustead Beef fails to fulfil clause 4.1 within four months of the signing of the agreement. Clause 4.1 indicates that Boustead Beef should, upon signing the agreement, show proof of funding to the tune of US$130 million over five years within a period of four months.
As part of the agreement, the CSC or the government was supposed to receive US$100 000 as fixed rental from year one to year five per annum, and year “shall commence on 1 January 2019 and 8% of the actual total revenue or turnover monthly, commencing from the first month of year six in this agreement, from the effective date up to year 25. Such shall be paid by the 10th of each and every following month”.
“This will apply from the effective date until the expiration of the agreement when the managing partner, Boustead Beef, must have cleared the CSC legacy debt. Thereafter, and commencing upon renewal of this agreement, CSC shall negotiate for an increase in the actual total revenue or turnover return with Boustead Beef,” the agreement reads in part.
Meanwhile, Boustead Beef has approached the courts seeking termination of corporate rescue proceedings. The CSC entered judicial management in 2020 after the government claimed that the LJFCA it entered into with Boustead in 2019 was difficult to implement as creditors were at the time mounting plans to attach the firm’s assets.
Ngoni Kudenga of BDO Zimbabwe Chartered Accountants was then appointed corporate rescue practitioner, before being disqualified on conflict of interest grounds.
Kudenga was then replaced by Vonani Majoko of Majoko and Majoko Legal Practitioners who was also removed recently.
In his founding affidavit, Boustead’s acting managing director Reginald Shoko said the government had given his company control of the meat processor, hence the need for corporate rescue proceedings no longer subsisted.
“Applicant (Boustead Beef) has been managing the affairs of the Cold Storage Company (Private) Limited in pursuit of the provisions of the Livestock Joint Farming Concession Agreement concluded with the government of Zimbabwe; and as such, there exists no further cause for the Cold Storage Company (Private) Limited to remain under corporate rescue,” Shoko said in an application lodged on 15 August 2022.
“Applicant is advised and accepts that this honourable court will set aside the court order which commenced the corporate rescue proceedings, in terms of Section 125 of the Insolvency Act.”
“This is an application for the termination of corporate rescue proceedings in respect of the Cold Storage Company (Private) Limited, which applicant is advised,” Shoko said.
He cited Agriculture minister Anxious Masuka and the deputy master of the High Court as first and second respondents.