Darlington Musarurwa Business Editor
THOUGH seemingly in the dumps, livestock producer and marketer the Cold Storage Company continues to attract suitors, with the latest being a consortium from the United Arab Emirates, Switzerland and Rwanda, who are dangling a US$47 million investment for the business. The development underlines the meat processor’s potential and the inherent value of its assets, even as it nurses huge debts.

CSC’s new suitor, Octadav Africa, is a UAE-registered company backed by two agro-based venture capital firms – Al Zahal based in the Middle East and Zurmont, a Swiss-based private equity firm. The African operation is anchored by Rwandan partners Inyange, who operate a cold chain management business.

Information gathered by The Sunday Mail Business indicates that Octadav Africa wants to establish a joint venture with Government through which an initial capital investment of US$22 million will be made.

The sum is expected to be paid back over an eight-year period. A similar amount will be invested in a two-stage approach covering four years to access farm land, restock herds and retool. An additional US$2,7 million will go to an envisaged separate entity for cold chain and logistics.

The project, which proposes to initially focus on beef and goat meat, is designed to leverage on grass-fed and organic meat.

Reads part of the proposal, “We represent Octadav Africa as investment and strategic partners in Zimbabwe . . . The project is specifically driven at supplying the emerging markets in (the) Middle East and East Africa. The strategic choice of Zimbabwe is on the belief in its massive potential in the supply of non GMO and non-GMO fed livestock. This is an export initiative.

“The initial product offering shall be beef and goat . . . We are not oblivious of the debt overhang and technical/actual insolvency of CSC. Our strategic choice would be to incorporate CSC as a public partnership. We shall further advice on conversion of present short term debts of strategic partners into a hybrid equity-debt instrument.”

The investment is premised on access to land owned by the CSC and the Matabele/Mashona cattle breed; deployment of supervised contract farming in the Lowveld and Matabeleland; access to animal husbandry expertise, retooling of CSC infrastructure, plant and equipment; and debt renegotiations.

Octadav Africa is prepared to make presentations on the proposal, facilitate a visit by investors and “negotiate with critical stakeholders in deploying strategic intentions”.

It appears Government has yet to respond to the proposal. Attempts to get a comment from Agriculture, Mechanisation and Irrigation Development Minister Dr Joseph Made were unsuccessful last week. The CSC’s fortunes took a knock in 2001 when the European Union, which allocated an import quota for Zimbabwe, indefinitely suspended beef purchases from the country following an outbreak of foot and mouth disease.

Since then Government and CSC management have been exploring options to revive the business. There have been three turnaround strategies in the past seven years – all of them have come to naught.

Indonesian deal
The stabilisation of the economy after 2009 brought with it a new investor to CSC in the form of Indonesian firm Ostrindo. Ostrindo was roped in to resuscitate the Bulawayo unit and was given a 15-year lease to run CSC’s abbatoir in Zimbabwe’s second-largest city.

However, the investor opted out of the deal after claiming that the country’s diminishing cattle herd could not ably support and sustain the business.

But on June 23, 2015, CSC chief executive Mr Ngoni Chinogaramombe told the Parliamentary Portfolio Committee on Agriculture that Ostrindo pulled the plug on the planned US$57 million joint venture after Government took long to approve the deal.

Assets disposal
To keep the business afloat, management has had to consider disposing some of the parastatal’s assets that are considered to be non-core.

In 2012, CSC proposed to sell assets valued at US$8,5 million but Government blocked that move. Two years later another planned sale of assets worth US$14 million was frowned upon by Government.

Earlier this year, Government intimated that it might have to go it alone, as it was considering reviving the cattle finance scheme and offering feedlots for communal farmers.

Chinese interest
There are Chinese companies that have been linked to the parastatal. Faced with a growing middle class, China is foraging the international markets to cater for its growing tastes and demand. Its largest US takeover has been the US$4,7 billion investment that was made in Smithfield, a pork producer, in 2013.

It is understood that CSC’s idle assets could pique the interest of Chinese investors.

But CEO Mr Chinogaramombe says he is not aware of any discussions with potential investors.

“There is nothing like that. If there is such a deal, maybe it is still with Government (because) we are yet to get that information.”

After being shut out of the EU market in 2001, CSC had to close plants in Kadoma, Marondera and Chinhoyi. Far from its core business, the company is now surviving on slaughter fees and rent from leasing out properties.

However, the slaughter rate has dropped from 50 000 to below 2 000 cattle per month as private abattoirs compete for the same market.

It was hoped that the recent completion of the company’s forensic audit would pave the way for potential investors.

Finance scheme And CSC’s debt continues to mount.
When the country switched from the Zimbabwean dollar to the multiple currency system in 2009, CSC’s debt stood at US$9 million. It has since soared to more than US$25 million.

From 1983 to 1987, CSC handled an estimated 500 000 cattle a year through abattoirs and 250 000 through the feedlots and ranches. The cattle finance scheme financed about 600 000 head of cattle on commercial farms.

At its peak Zimbabwe export sales were: EU — 9 000 tonnes; Angola — 12 000 tonnes; Indian Ocean Islands — 3 000 tonnes; and Switzerland — 1 500 tonnes.

Other countries in the Southern African region are thriving in the industry.

In 2012 total beef and veal exports from Namibia amounted to 18 100 tonnes, with South Africa accounting for 70 percent of the total.

Exports from Botswana amounted to 16 400 tonnes, with South Africa accounting for 94 percent of this.

Agricultural and livestock experts have recommended restoration of the cattle finance scheme to provide farmers with long-term support at low interest terms, formalisation of auction systems and re-fencing of commercial farms.

Re-establishment of discipline and veterinary controls across the country for disease control are also crucial.