RBZ assumes Natfoods legacy debt

NATIONAL Foods (Natfoods) says the central bank has assumed its US$54,9 million legacy debt owed to a foreign supplier, in a move that will allow the food processor to continue operating its flour milling unit.
In December last year, the group warned that its flour milling division was on the brink of closing down after a foreign supplier of wheat refused to supply more stocks following delays in the repatriation of payments.
“An agreement was reached between the Reserve Bank of Zimbabwe (RBZ) and the group’s major grain supplier wherein the RBZ assumed the group’s legacy debt to its supplier amounting to $54,9 million as part of a funding agreement, which will see this debt being settled over an agreed period,” Todd Moyo, Natfoods’ chairman, said.
He added that Natfoods has settled the full amount, in domestic currency, to the reserve bank. A development which he says resulted in a reduction in the group’s creditors.
Government last year promised to resolve the Natfoods crisis, but did not give full details then on how it planned to settle the issue.
“What I can say about Natfoods is that we had discussions with them and the reserve bank and the issues that they had raised were all resolved and the agreement was that they will not be closing as they had indicated,” industry minister Mangaliso Ndhlovu said a few days after Natfoods’ alarming announcement.
Meanwhile, Moyo revealed that the central bank has however been delaying payments to the foreign supplier.
“Regrettably, shortly after the period end the RBZ has had to delay payments on the facility which in turn has disrupted flour supplies to the market, he said in a statement accompanying the group’s unaudited results for the six months ended December 31, 2018.
“The group continues to work closely with the RBZ to resolve the matter and remains fully capacitated to produce adequate volumes of flour provided the necessary foreign currency to import wheat is availed,” Moyo said.
Natfoods posted a profit after tax of $16,8 million, which was 78 percent above the same period last year.
The group’s volumes grew by 18,4 percent over the prior period, driven mainly by stockfeeds “as the poultry sector recovered from the Avian Influenza outbreak” and maize “on the back of a poorer local maize harvest and the fact that household maize retentions were reduced on account of the attractive GMB price”.
The period under review was characterised by a significant increase in inflation with CPI gaining 39,2 percentage points from 2,9 percent in June 42,1 percent in December.
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