SUGAR processor starafricacorporation says the plant upgrade of its Gold Star Sugar Harare plant, the major cause of its perennial losses, is on schedule and is expected to be commissioned in January next year.“Eighty-five percent of the contract price has been paid as per the payment stipulated in the contract. The first lot of equipment constituting 35 percent of total is undergoing pre-shipment inspection by SGS, an international engineering consultancy firm,” star-africa said.
The Zimbabwe Stock Exchange-listed firm said shipment of the plat equipment was targeted for next month while the manufacture of the remaining lot to be shipped by October 31, 2013, is in progress.
The initiative is aimed at halting starafricacorporation’s perennial loss-making streak due to old and inefficient equipment at the company’s sugar refinery.
As a result of viability challenges starafricacorporation could not meet its financial obligations, prompting creditors and financiers to contemplate attaching the troubled firm’s assets.
To prevent this, directors of the company proposed a scheme of arrangement overwhelmingly endorsed by lenders and creditors at a creditors’ meeting held in Harare on June 5 this year.
The scheme was sanctioned by the High Court on August 7 2013 and was registered with the Registrar of Companies a week later.
The scheme provides a six months moratorium on all debts. Part of the scheme of arrangement was the proposed disposal of starafrica’s 33 percent investment in Tongaat Hulett Botswana and Blue Star Logistics, which were all carried at the company’s extraordinary general meeting held on July 19.
Earlier, starafrica had successfully negotiated for restoration of raw sugar supply to Gold Star Sugar Harare under an over-arching toll refining and del credere (guaranteed) agency agreement between the it and its raw sugar supplier, Zimbabwe Sugar Sales.
The agreement resulted in starafrica resuming sugar refining operations in December last year and the arrangement remains in force, but the firm faces stiff competition from low priced imports.
“starafrica has often voiced its concern over low-priced sugar imports. The firm said the sugar industry has made submissions to Government to counter the adverse impact of sugar imports”.
Its scheme provides that its lenders and creditors, who are owed a total of US$19,7 million, would not be paid for months to allow the company to work on its payment plan.
The six-month moratorium would allow starafrica time to sell some of its assets to partially settle liabilities immediately thereafter while the balance would be staggered over 32 months.