Boustead Beef, the British company that entered into an agreement with Government to revive Cold Storage Company (CSC), submitted over $3,5 billion in claims to the company at the first creditors meeting last week.
The claim was made before the Additional Master of High Court (Bulawayo) – Rose Dube who presided over the meeting.
The meeting also disqualified Ngoni Kudenga of BDO Zimbabwe Chartered Accountants who Government, through the Ministry of Lands, Agriculture, Fisheries, Water and Rural Resettlement had appointed as Corporate Rescue Practitioner of CSC.
Kudenga, who needed endorsement from the creditors was disqualified by Dube on the basis of an objection raised by Dumisani Dube of Mathonsi Ncube Law Chambers purported to be representing some workers that the former was conflicted because of his previous association with Agriculture Minister Anxious Masuka.
Kudenga is the president of Zimbabwe Agriculture Society (ZAS), while Masuka was the CEO prior to his appointment as the minister.
Vonani Majoko of Majoko and Majoko Legal Practitioners was then voted the interim corporate rescue practitioner.
Boustead, which under the agreement was given the rights to use CSC assets for 25 years jointly applied with the Government to have the company placed under corporate rescue to protect assets from being attached over debts.
This is because CSC maintained its legal entity status and remained subjected to lawsuits. The lawsuits prevented Boustead access to some of the assets.
One of the mandates for Kudenga was to establish if Boustead had the capacity to implement the agreement.
According to sources, Boustead made four claims equivalent to $3,5 billion, which was provisionally accepted but would need to be validated by the corporate rescue practitioner.
The $3,5 billion is way above the $145 million in BDO’s preliminary report.
“The claim came as a shock… It was a combination of the US dollars and Zimbabwean dollars but all in all amounted to about $3,5 billion.
“The claims make Boustead the largest creditor of the company and I believe this was meant to provide it with more power to influence the proceedings especially the voting of another rescue manager after the disqualification of Kudenga,” said one source who requested not to be named because he is not authorised to speak publicly.
Another source said: “It’s only Boustead that knows about this money but if this money got into CSC through whatever way, surely the company should not be struggling. Even officers from the Ministry of Agriculture were surprised.”
In 2019, Boustead, linked to white former commercial farmer Nicholas Havercroft, entered into an agreement with government to revive CSC , once one of the country’s major employers.
Efforts to get a comment from Havercroft proved fruitless this week.
The agreement gave Boustead rights to use CSC assets for 25 years and invest US$130 million over five years, being for both capital expenditures and working capital for the business.
In addition, it required to settle CSC financial debts totalling US$42 million, pay rentals of US$100 000 per annum during the first five years of the concession agreement, take over and run the management CSC ranches in Maphaneni; Dubane; Umguza; Chivumbuni; Mushandike; Willsgrove; and Darwendale for an initial period of 25 years.
Boustead is yet to fulfil any of the obligations. Instead, Boustead has been collecting rentals and banking the money into their accounts, another source privy to the affairs revealed.
Kudenga told Business Weekly in an interview the meeting never got to the stage were voters got the opportunity to ratify or reject his appointment.
“The Master (of the High Court) told the meeting that she had received an objection that I am conflicted; the reason being the minister was the CEO of ZAS where I am the president,” said Kudenga.
“So the creditors were not given the opportunity to ratify my appointment or otherwise.”
Had the meeting ratified Kudenga, he needed a resolution to do a forensic audit and come up with a rescue plan with 45 days.
CSC Pension Fund chairperson Mr Wilfred Masunda, said they would challenge “whatever happened in that meeting.”
“Creditors never rejected the appointment of BDO but the (Additional) Master of High Court on grounds that Kudenga is conflicted. Apparently there is a lawyer who purported to represent some of the workers. We have done our investigations and nobody whatsoever confirmed to be represented by him,” claimed Masunda.
“And now Boustead had submitted a claim of $3,5 billion; where do we now direct our claim given that the investor is actually the largest creditor, “ he said.
A preliminary review by Kudenga on what could have led to the collapse of the company include inadequate working capital.
The company did not have sufficient working capital to carry out day to day business transactions, including securing the stock.
Poor infrastructure due to under-capitalisation, high interest charges on loans and borrowings, outbreaks of diseases like bovine spongiform encephalopathy and foot and mouth disease, high staff turnover at senior management level and management deficiencies were among reasons for the collapse of the company.