Lobels invest US$3,6 million on refurbishing

Lobels Holdings will soon invest US$3,6 million on refurbishing and replacing its Harare and Bulawayo plants with a view to significantly ramp up production. The country's oldest bakery has reportedly set its sights on increasing daily production from 100 000 to 300 000 loaves by the end of this year.

Sources said the bread maker would refurbish the Harare factory to enhance efficiencies while the Bulawayo plant would be replaced with a new one.

"They will invest about US$3,6 million on refurbishing and replacing the plants. The Harare one will be refurbished but in Bulawayo they will replace it."

But it was not immediately clear where the money will be coming from considering the firm is battling to pay off millions of dollars owed to banks and creditors.

However, a consortium of local businessmen linked to the Confederation of Zimbabwe Industries is reportedly on the verge of taking over the firm.

Lobels Holdings resident director Retired Brigadier David Chiweza was not available for comment yesterday as his mobile phone went unanswered.

But informed sources last week told Herald Business that a consortium of local businessmen was closing in on a stake in the recuperating bread-making firm.

Sources in CZI would also not confirm the deal, but hinted some of its members were lining up to acquire Lobels and would make an announcement this week.

"We are not able to comment publicly at the moment, but an official statement would be released by Friday next week," said a high-profile source.

"It is difficult to comment on the deal at this moment as there are some caveats (cautions not to comment) on it."

Unconfirmed reports last year indicated Kayseed Trading, owned by a local consortium, invested an undisclosed amount to enable Lobels to resume production.

Lobels Holdings struck an agreement with trade creditors and banks last year to suspend the sale in execution of assets to allow time for the investor.

Its assets were transferred to Lobels 1 and capitalised as 98 percent debentures and 2 percent ordinary shares to be changed over in favour of trustees of debentures.

Lobels 2 would lease assets from Lobels 1, operationalise the equipment and raise funds to revive the business.

Lobels 2 will pay rentals to Lobels 1, which the latter would use to clear its multimillion-dollar liabilities to local financial institutions as well as creditors.

Assets in Lobels 1 form the security to debenture holders and are administered trustees (the advisors) and a proxy for creditors.

Lobels owes banks a total of US$14 million, which reportedly attracts between 15 percent and 45 percent interest and trade creditors about US$4 million.

In a bid to salvage its future, Lobels engaged leading financial advisors CBZ Bank and renowned lawyers Dube, Manikai and Hwacha to devise a framework to revive the firm.

 According to the Lobels revival framework, the amount owed to banks was converted to three (or other term) debentures to give Lobels some relief.

The firm has since resumed limited production and is operating on the basis of the concept framework devised by its advisors.

It planned to pay small creditors US$30 000 each while bigger creditors would be paid 30 percent of what they are owed.