Lobels secures a foreign investor

The bread maker, Lobel's Holdings Limited is reported to have secured a foreign investor to resuscitate the cash-strapped group, Daily News reported on Friday.

Lobel's financial advisors CBZ Bank and legal advisor Dube Manikai and Hwacha told the newspaper that the company has secured a foreign investor with international experience and expertise in running a bakery.

"A non-disclosure agreement is at an advanced stage of discussion with the investor," said the advisers in a statement, adding that the investment would immediately see the company double production at its Bulawayo and Harare plants.

"The strategy is to increase production to 55 000 loaves of bread per day as at 1 September 2011 and growing to 90 000 loaves per day within the next four weeks at the Harare bakery, and from 45 000 loaves per day to 90 000 loaves per day at the Bulawayo bakery, within the same period."

"Pending the finalisation of the legal documentation towards the implementation of the proposed transaction - the opening has been made possible through the leasing of land, buildings and equipment of Lobel's to a third party Kayseed," added the advisers.

Kayseed Trading, which has been temporarily financing Lobel's since it resumed operations at the beginning of  August this year, is currently producing 35 000 loaves of bread per day, up from 15 000 loaves per day at the time of resuming production.

Meanwhile, the company advisers say Kayseed has acquired funds to settle amounts being owed to small creditors of up to US$ 30 000 and partial payment for larger creditors.

The re-payment terms entails that major creditors get three-year debentures attracting a 15 percent interest per annum, legal advisor Edwin Manikai said.

This payment plan was set in place after approval from the creditors who are owed more over $15 million.

Banks that are owed by the confectionary maker include CBZ, FBC Bank Limited and Metropolitan Bank.

"We shall shortly announce the location of a data room, to verify the amounts due to creditors.

Creditors will be asked to verify their status as creditors of Lobel's by producing their company documents," the company's advisors said in a statement.

This comes after Lobel's announced in July that they were re-opening under a new structure and would split into two: Lobel's One and Two, with the group's assets being transferred into the former.

The Harare based bakery was temporarily shut last year due to working capital shortages and a huge debt ledge.

In its prime as one of the country's largest bread maker Lobel's once held a 30 percent share of Zimbabwe's $1,2 million daily bread market.

According to market reports, since dollarisation in February 2009, Lobel's has pursued financing talks with regional investors, including South African private equity firm Brait, the Industrial Development Corporation, Premier Foods, the PTA Bank and Standard Bank's private investment arm.

The company's advisors said the troubled company needs about $25-$30 million for it to fully recover.