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Interfresh is seeking shareholder approval to dispose of its Head Office in Graniteside for $5,8 million of which funds raised would be channelled towards settling part of its $9,4 million debt.
“The disposal proceeds shall be used to retire short term debt of $4,4 million. It is the considered opinion of directors that the disposal of the property for the purpose of retiring of all short term debts,” Interfresh chairman, Kenias Mafukidze said.
He said the company would also use part of the funds to acquire a smaller administration office.
“Disposal proceeds shall be used to purchase a smaller property to house the head office and the Harare based business units for a maximum of $1 million and finance working capital requirements with the balance,” Mafukidze said.
The company chairman said its current net liability position was unsustainable due high cost of short term borrowings.
“The level and cost of short term debt is unsustainable .The rolling over of short term borrowings is becoming increasingly difficult with the risk of higher rollover fees and even higher interest rates,” he said.
He said the cost of borrowings was now significantly higher for the company than the return it realised from leasing its excess property.
“Based on the level and cost of borrowing at the end of October 2011,the annualised cost of total debt would be reduced from $1,4 million to $0,5 million, a saving of $300 000 on operating expenses associated with a larger property complex, while interest cover would significantly improve, ”Mafukidze said.
He said the company would reduce its head office head count as part of its restructuring that has seen the discontinuance of its flower business, Guruve Citrus Project and changing of its vegetable business model from retail to wholesale.
“Downsizing of the head count for the head office and the other business units based at the property complex will result in the transfer of certain business activities eg citrus marketing, workshop and cold storage to Mazoe Citrus Estates where there is excess infrastructure,” He said.
“The disposal proceeds shall be used to retire short term debt of $4,4 million. It is the considered opinion of directors that the disposal of the property for the purpose of retiring of all short term debts,” Interfresh chairman, Kenias Mafukidze said.
He said the company would also use part of the funds to acquire a smaller administration office.
“Disposal proceeds shall be used to purchase a smaller property to house the head office and the Harare based business units for a maximum of $1 million and finance working capital requirements with the balance,” Mafukidze said.
The company chairman said its current net liability position was unsustainable due high cost of short term borrowings.
“The level and cost of short term debt is unsustainable .The rolling over of short term borrowings is becoming increasingly difficult with the risk of higher rollover fees and even higher interest rates,” he said.
He said the cost of borrowings was now significantly higher for the company than the return it realised from leasing its excess property.
“Based on the level and cost of borrowing at the end of October 2011,the annualised cost of total debt would be reduced from $1,4 million to $0,5 million, a saving of $300 000 on operating expenses associated with a larger property complex, while interest cover would significantly improve, ”Mafukidze said.
He said the company would reduce its head office head count as part of its restructuring that has seen the discontinuance of its flower business, Guruve Citrus Project and changing of its vegetable business model from retail to wholesale.
“Downsizing of the head count for the head office and the other business units based at the property complex will result in the transfer of certain business activities eg citrus marketing, workshop and cold storage to Mazoe Citrus Estates where there is excess infrastructure,” He said.
