News / National
Ignatius Chombo in a bid to takeover Lobels
20 Feb 2011 at 13:35hrs | Views
The Minister of Local Government, Rural and Urban Development, Dr Ignatius Chombo, is alleged to be in talks with Lobels Holdings Limited directors for a possible takeover.
Sources close to the deal told the state controlled media 'The Sunday Mail' that Dr Chombo has put in a US$5 million bid that will also see him injecting fresh capital into the company.
Directors at Lobels Holdings Limited have been split right through the middle on the correct path to take with regards recapitalising the troubled business entity.
Lobels Holdings is desperately in need of new money to replace its ageing plant and equipment as well as for working capital purposes.
The latest development comes after deals that would have seen Lobels Holdings Limited shareholders disposing of a controlling stake at Tiger Brands, a South African company, and Innscor Africa collapsing.
According to market analysts, Lobels' value ranges from US$25 million to US$30 million.
Dr Chombo, however, dismissed the rumours that he intends to take over Lobels.
"I have no intentions of investing into confectionery. My interests are in agriculture," he said before adding a quip, "I don't even eat bread!"
Lobels Holdings resident director and acting chief executive officer retired Brigadier-General David Chiweza denied that the company was in talks with Dr Chombo but, notably, confirmed that they were negotiating with potential buyers.
"That is not true.
"I have not heard any of that, those are just market rumours though we are negotiating with potential buyers, it is certainly not the minister," said Rtd Brig Chiweza.
However, market sources say the minister has already done all the due diligence with a view to taking over the ailing bakery.
Mr Livingston Gwata, who is also the chairman of the group, tourism guru Mr Herbert Nkala, Dr Burombo Mudumo, Rtd Brig Chiweza and Mr Fred Mtanda form the consortium that owns the majority stake of the troubled firm.
From a peak production capacity of 400 000 loaves a day in 2004, Lobels numbers have taken a sharp decline of less than 10 000 loaves per week.
Lobels' loaves are a rare sight on most shop shelves.
This has hampered the company's ability to pay its employees and to meet pressing working capital needs.
Problems at Lobels started mid-last year when an audit report by Camelsa Chartered Accountants exposed a massive US$7,6 million fraud.
The audit revealed that the company was prejudiced out of about US$7,6 million, which was siphoned through fictitious companies purported to be flour suppliers.
The company is now pinning its hopes on the injection of fresh capital from either the existing shareholders or other potential suitors eyeing the business.
Shareholders are hoping that once the company is recapitalised, bread output would increase to 300 000 loaves per day in the short to medium term.
Lobels commenced operations in the late 1940s as a family business run by the Lobel family.
It is the oldest bakery in the country with possibly the oldest equipment, which needs urgent replacement.
Sources close to the deal told the state controlled media 'The Sunday Mail' that Dr Chombo has put in a US$5 million bid that will also see him injecting fresh capital into the company.
Directors at Lobels Holdings Limited have been split right through the middle on the correct path to take with regards recapitalising the troubled business entity.
Lobels Holdings is desperately in need of new money to replace its ageing plant and equipment as well as for working capital purposes.
The latest development comes after deals that would have seen Lobels Holdings Limited shareholders disposing of a controlling stake at Tiger Brands, a South African company, and Innscor Africa collapsing.
According to market analysts, Lobels' value ranges from US$25 million to US$30 million.
Dr Chombo, however, dismissed the rumours that he intends to take over Lobels.
"I have no intentions of investing into confectionery. My interests are in agriculture," he said before adding a quip, "I don't even eat bread!"
Lobels Holdings resident director and acting chief executive officer retired Brigadier-General David Chiweza denied that the company was in talks with Dr Chombo but, notably, confirmed that they were negotiating with potential buyers.
"That is not true.
However, market sources say the minister has already done all the due diligence with a view to taking over the ailing bakery.
Mr Livingston Gwata, who is also the chairman of the group, tourism guru Mr Herbert Nkala, Dr Burombo Mudumo, Rtd Brig Chiweza and Mr Fred Mtanda form the consortium that owns the majority stake of the troubled firm.
From a peak production capacity of 400 000 loaves a day in 2004, Lobels numbers have taken a sharp decline of less than 10 000 loaves per week.
Lobels' loaves are a rare sight on most shop shelves.
This has hampered the company's ability to pay its employees and to meet pressing working capital needs.
Problems at Lobels started mid-last year when an audit report by Camelsa Chartered Accountants exposed a massive US$7,6 million fraud.
The audit revealed that the company was prejudiced out of about US$7,6 million, which was siphoned through fictitious companies purported to be flour suppliers.
The company is now pinning its hopes on the injection of fresh capital from either the existing shareholders or other potential suitors eyeing the business.
Shareholders are hoping that once the company is recapitalised, bread output would increase to 300 000 loaves per day in the short to medium term.
Lobels commenced operations in the late 1940s as a family business run by the Lobel family.
It is the oldest bakery in the country with possibly the oldest equipment, which needs urgent replacement.
Source - Byo24NEWS
