Fresh details have emerged over the ownership of pharmaceutical firm, CAPS Holdings, amid revelations that the 68 percent shareholding Government claims to have bought from businessman, Fred Mutanda, was never paid for, Business Weekly can exclusively reveal.
Mutanda is the current majority shareholder in CAPS Holding through his vehicle CAPS International.
While the Government has persistently claimed 68 percent ownership of CAPS, the parent company of drug manufacturer CAPS Pharmaceuticals, Mutanda, revealed this week that what only exists is an agreement for the purchase of the shares.
“The RBZ failed to pay for that shareholding
in terms of the agreement,” Mutanda revealed this week.
Confirming Mutanda’s claim is a letter, dated December 10, 2018 from the Attorney General’s office that while the Government had shown interest in purchasing the stake through negotiations conducted on its behalf by the RBZ, it later decided to the contrary.
“Government is not interested in acquiring your shareholding in CAPS International and will accordingly not enter into a negotiated settlement,” the AG revealed in the letter seen by Business Weekly.
Mutanda said the agreement for the sale of CAPS was entered into after the Government had already “seized” CAPS and some of his businesses including a money transfer agent.
The Government has, however, denied seizing Mutanda’s businesses.
“So the Government does not own CAPS unless that ownership is based on the said forfeiture,” argued Mutanda.
“I have met the minister (of Industry and Commerce Dr Sekai Nzenza) and I made this position clear to her. Minister Nzenza recently said the Government had moved in to resolve the shareholding dispute at CAPS.
Industry and Commerce Minister Dr Nzenza, this week admitted Government was looking into the CAPS shareholding issue.
“There are some shareholding issues which, myself and the Reserve Bank of Zimbabwe are now looking into,” said Dr Nzenza.
“We want to make sure the dispute is resolved to allow for recapitalisation of CAPS. We have bigger plans for the company.”
However, Dr Nzenza could not disclose details on revelations that Government had no stake in CAPS. Several calls seeking a comment from RBZ governor Dr John Mangudya, were not answered.
Already, Mutanda is challenging CAPS’ debt takeover by ZAMCO, arguing it is the RBZ that has obligation to settle the debt it owes CAPS, which has ballooned to US$7million. The debt arose after RBZ in 2008 ordered CAPS to release all its drugs to state-owned National Pharmaceuticals.
Mutanda is resisting the move by ZAMCO to convert the debt into equity. The central bank set up ZAMCO in 2015 as a special purpose vehicle established to hive off no performing loans from banks that were groaning under the burden of toxic obligations.
The legacy issues at CAPS continue stalling the revival of once the country’s largest producer of medical drugs. CAPS used to supply 75 percent of the country’s drug requirements. It was also a major medical drug supplier in the sub-Saharan Africa.
CAPS Holdings Limited is engaged in the procurement, manufacturing and distribution of pharmaceutical, veterinary and consumer products. It also manufactures anti-malarials, painkillers, antibiotics, paediatric formulations, and a range of other drugs and medicines.
In 2006, the company commenced the production of Nevirapine and Lamivudine, which are anti-retroviral drugs used in the treatment of acquired immune deficiency syndrome (AIDS). CAPS Holdings Limited subsidiaries include Geddes Limited, St Anne’s Hospital, Autosterile, QV Pharmacies and CAPS Botswana. It also has subsidiaries in Botswana and South Africa, and supplies health products throughout Africa. In 2018, Indian firm, Ajanta Pharma entered into an agreement with the Government to take over the business and revive its operations. Several other investors from the Middle East, the US and Europe also enquired on prospects of investing in CAPS.
It was previously listed on the Zimbabwe Stock Exchange before it delisted in 2011.