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CSC takeover deal hits fresh turbulence
02 Jul 2023 at 07:44hrs | Views
COLD Storage Company (CSC) corporate rescue practitioner has filed an urgent High Court application seeking the suspension of a Livestock Farming Concession Agreement (LFCA) signed between government and Boustead Beef UK.
Crispen Mwete of C Mwete and Company was appointed CSC corporate rescue practitioner on April 24, 2023, following the removal of Vonani Majoko.
In his founding affidavit lodged at the High Court on June 14, 2023, Mwete said the LFCA signed in January 2019 was prejudicial to CSC.
Under the deal, Boustead was supposed to invest about US$130 million into CSC over a period of five years.
It was also expected to pay rentals of US$100 000 per annum during the first five years of the agreement.
"The total legacy debt is the sum of US$33 000 000.00," Mwete said.
"First respondent (Boustead), in terms of the LFCA assumed the debt on behalf of CSC to pay off the creditors.
"To date, the first respondent has not performed and paid this debt in full.
"This is a material breach of contract."
Mwete cited Boustead Beef, Agriculture minister Anxious Masuka and the master of the High Court as respondents respectively.
"Further, the same contract CSC purports to dispose of all its rights in the scheme of arrangement to Boustead Beef Uk (Pvt) Ltd at a price of 10 cents to a dollar, meaning that the latter is mandated to settle the legacy debt of US$330 072.00," Mwete said.
"Put differently, the first respondent was unable to service the legacy debt.
"This is very highly irregular by all standards. The creditors sought to be ripped off.
"I aver that if the contract is suspended it will allow me to take full control of CSC and further investigate the allegations of the minister (Masuka)."
Mwete said there was need for a forensic audit into CSC financials.
Mwete complained that Nicholas Havecroft, the director of Boustead Beef was denying him access to CSC assets, premises and records.
"I aver that as long as I do not have control of these assets, or rather I do not know of their existence, my appointment as corporate rescue practitioner is nothing short of useless," Mwete said.
"How will I turn around a company whose assets I do not know?" he queried.
"How will I draw a corporate rescue plan that will attract investors when I know not of the company assets?
"Without those assets, the CSC balance sheet only has liabilities and therefore cannot be rescued."
In his opposing affidavit, Havecroft begged the court to remove the application from the roll of urgent matters.
He also said Mwete was illegally appointed and conflicted.
"In any event, it is not within the scope of the applicant's duties to question the performance of the first respondent regarding the JLFCA," he said.
"I strongly object to the applicant's requests and assertions as they lack merit and are based on misleading interpretations of the facts.
"The applicant's suggestion to suspend the contract and initiate a thorough investigation is unnecessary and unwarranted."
Havecroft said Boustead has "diligently fulfilled its obligations" under the LFCA and has "acted in the best interests" of the meat processor.
Crispen Mwete of C Mwete and Company was appointed CSC corporate rescue practitioner on April 24, 2023, following the removal of Vonani Majoko.
In his founding affidavit lodged at the High Court on June 14, 2023, Mwete said the LFCA signed in January 2019 was prejudicial to CSC.
Under the deal, Boustead was supposed to invest about US$130 million into CSC over a period of five years.
It was also expected to pay rentals of US$100 000 per annum during the first five years of the agreement.
"The total legacy debt is the sum of US$33 000 000.00," Mwete said.
"First respondent (Boustead), in terms of the LFCA assumed the debt on behalf of CSC to pay off the creditors.
"To date, the first respondent has not performed and paid this debt in full.
"This is a material breach of contract."
Mwete cited Boustead Beef, Agriculture minister Anxious Masuka and the master of the High Court as respondents respectively.
"Further, the same contract CSC purports to dispose of all its rights in the scheme of arrangement to Boustead Beef Uk (Pvt) Ltd at a price of 10 cents to a dollar, meaning that the latter is mandated to settle the legacy debt of US$330 072.00," Mwete said.
"Put differently, the first respondent was unable to service the legacy debt.
"This is very highly irregular by all standards. The creditors sought to be ripped off.
Mwete said there was need for a forensic audit into CSC financials.
Mwete complained that Nicholas Havecroft, the director of Boustead Beef was denying him access to CSC assets, premises and records.
"I aver that as long as I do not have control of these assets, or rather I do not know of their existence, my appointment as corporate rescue practitioner is nothing short of useless," Mwete said.
"How will I turn around a company whose assets I do not know?" he queried.
"How will I draw a corporate rescue plan that will attract investors when I know not of the company assets?
"Without those assets, the CSC balance sheet only has liabilities and therefore cannot be rescued."
In his opposing affidavit, Havecroft begged the court to remove the application from the roll of urgent matters.
He also said Mwete was illegally appointed and conflicted.
"In any event, it is not within the scope of the applicant's duties to question the performance of the first respondent regarding the JLFCA," he said.
"I strongly object to the applicant's requests and assertions as they lack merit and are based on misleading interpretations of the facts.
"The applicant's suggestion to suspend the contract and initiate a thorough investigation is unnecessary and unwarranted."
Havecroft said Boustead has "diligently fulfilled its obligations" under the LFCA and has "acted in the best interests" of the meat processor.
Source - The Standard
