Star Africa says it is still actively searching for a new strategic investor while it is continuously engaging creditors and shareholders to seeks ways of restructuring the company’s balance sheet.
This comes after the group failed to settle creditors in terms of the scheme of arrangement which was sanctioned by the High Court in 2013 due to delays in the upgrade of the GSSH plant and disposal of the company’s stake in Tongaat Hulett Botswana and Blue Star Logistics.
Chief executive Regis Mutyiri said the group has since engaged creditors and shareholders to seek ways – which also include debt for equity swap – of restructuring the balance sheet.
“Pursuant to this, the group is working on a circular to shareholders is with a view to holding an Extra Ordinary General Meeting (EGM) in the second week of November 2016,” he said.
In a trading update, Mutyiri said sales volumes for the five-month period to August 2016 were 300% above prior year on the back of reduced prices, the benefits of the sugar import restriction and the improved production.
The group expects the same positive trend to continue in the second half on the back of concluded sugar supply contracts with some industrial customers who are in the process of winding up stocks of imported sugar.
Industrial sales currently account for 80% of the total while retail sales constitute 20%. Mutyiri however said the group would reverse the current sales mix in favour of the more profitable retail sales.
sing the current structure of sales mix in favour of retail sales as it is more profitable.
“We have concluded sugar supply contracts with some industrial customers and we are in negotiation with other customers.
“These developments have begun to impact positively on volumes and we expect the trend to pick up significantly in the second half of the year as most of our customers have run down their stocks of imported sugar,” he said.
According to Mutyiri, the Gold Star Sugars Harare (GSSH) plant is now achieving throughput of 400 tonnes per day which is adequate to meet all market segment requirements though frequent water outages due to erratic water supply from City of Harare are adversely affecting production.
Global Canesugar Services Limited (GCS) of India is completing the plant commission after the initial contractor Integrated Casetech Consultants had failed to meet required time frames.
“Equipment supplied by GCS to facilitate the integration of the upgraded section with the old section is on site and installation will commence in October 2016 with integration and commissioning targeted for mid-November 2016,” he said.
After commissioning, Mutyiri said the plant will achieve the refined sugar output of 600 tonnes per day.
He added that discussions with a major shareholder are at an advanced stage with regards to raising funding for the refurbishment of the old section of the plant in order to optimize plant output and efficiencies.
Commenting on raw materials availability, Mutyiri said the supply of strategic raw materials being raw sugar, coal and packaging material was stable and secure.
“We continue to engage our suppliers on the need to review prices downwards due to the fluidity of the market and pressure from customers,” he said.
During the period, Country Choice Foods operated profitably.
At the AGM, directors and audit fees were approved at $87 200 and $66 000 respectively.