Golden Sibanda Senior Business Reporter
Blue Ribbon Industries prospective investor, Tanzania’s Bakhresa Group, has insisted on a lengthy indigenisation compliance period, a demand which is likely to delay the recapitalisation of the local firm.Sources said parties to the deal have so far failed to reach common ground while a local pressure group has objected to a lengthy period of control for Blue Ribbon by a foreign entity.

It is understood that Bakhresa agreed to a 75 percent shareholding in Blue Ribbon, but the equity deal to recapitalise the distressed miller stalled over differences on the latter’s indigenisation plan.

“The indigenisation approval is not yet granted, we are still negotiating. Parties have not agreed on the compliance period; the investor wants a longer period,” a source said.

The source said that Bakhresa Group submitted its proposal to Government regarding the period in which it was would be willing to regularise its equity in the milling company.

And before parties to the deal reached consensus the Grain Millers Association of Zimbabwe petitioned Government against the investor’s proposed period of indigenisation.

This could drag rthe ecapitalisation process for Blue Ribbon, which suspended operations due to funding constrains before resuming maize milling last year after a deal with a supplier.

Blue Ribbon, which is under the judicial management of Grant Thornton’s Mr Reggie Saruchera, has recently also started testing its flour milling plant, prior to negotiating supply agreements.

According to GMAZ, the prospective investor has proposed to defer compliance until after 10 years.

Zimbabwe’s equity laws require foreign shareholders to hold a maximum of 49 percent with the balance required to be in the hands of local investors or State institutions.

However, a foreign investor may hold more than 49 percent stake in a local company after obtaining special dispensation from the Government as happened with the Zisco deal.

The millers argued that Blue Ribbon operated in a sector reserved for locals and allowing Bakhresa to defer indigenisation for 10 years would send a wrong signal to other investors.

They said other investors in the industry would also seek to prolong their compliance periods in similar fashion while workers of the respective company’s would also not benefit.

The country’s equity laws require foreigners investing into local companies to set aside at least 5 percent stake to be allocated to an employees’ share ownership scheme.

“After someone (also) came out in the open opposing investment (in Blue Ribbon) there is need to visit relevant authorities again and discuss the deal once more,” the source added.

However, the objection could stifle the company’s opportunity to secure investment required to retire debts, raise production and rehabilitate old and idle machinery.

Blue Riboon’s judicial manager, Mr Saruchera, last year said the company required about $40 million fresh capital, with about $15 million required to support its working capital needs.

The company has been buckling under heavy liabilities and shortage of working capital to support operations, which at one time forced it to put workers on shifts to manage costs.

Blue Ribbon has five main divisions BRI Logistics, Blue Ribbon Foods, JA Mitchells and Nutresco Foods. It used to be one of the largest millers in the country prior to its problems.

 

You Might Also Like

Comments

Take our Survey

We value your opinion! Take a moment to complete our survey