GOVERNMENT has cancelled the much touted US$130 million deal with a United Kingdom company, Boustead Beef (Boustead) for the recapitalisation of the Cold Storage Company (CSC), it has emerged.
The decision, which is yet to be officially announced, was made in by Cabinet during its weekly Tuesday meeting.
The multi-million-dollar deal was announced in November 2018, with government indicating the investor was willing to inject US$130 million to revive the defunct state-owned meat processor.
Government also announced at the time that Boustead would inherit CSC debts amounting to US$42 600 000 and also take over its ranches and properties dotted across the country for an initial period of 25 years.
The company was also supposed to take over and manage CSCs distribution centres in Harare, Gweru and Mutare for the same period.
However, Agriculture Minister Perrance Shiri reportedly told cabinet Tuesday the deal had fallen through after Boustead expressed reservations about it following its due diligence.
It emerged that CSCs’ level of indebtedness had been grossly understated and that it had lost the majority of its assets while most of the facilities had become so derelict they would be too costly to bring back to life.
“Shiri presented a report to cabinet in which he urged government to terminate the deal and adopt a new rescue plan for CSC because the current arrangement with Boustead was not materialising,” a cabinet source said.
“Shiri told the meeting that after undertaking its own due diligence, the investor realised that things were not as they seemed. It, for instance, emerged that the board and management of CSC had grossly understated the debt and also lied about any assets remaining.
“Apparently, the company has been stripped of all the major assets which management sold.
“So, Shiri was saying the investor, after realising the extent of disrepair of the CSS facilities, backed off.
“He thus asked for cabinet’s approval to terminate the contract to allow for the conception of a new rescue plan for CSC.
“So we agreed that the contract which had been entered into with Boustead company must be terminated in order to allow the rescue plan by the ministry of agriculture to go ahead without any other delay given the strategic nature of the company to the country’s economy.”
The CSC is angling for a return to the international beef market following years of collapse.
At its peak, it used to employ over 5 000 people and would export beef to the European Union, a business that earned the country the much-needed foreign currency.