Fidelity Life Assurance is seeking shareholder approval to acquire 81 percent of agro-industrial group, CFI Holdings’ Langford Estate in a land for debt swap deal and will assume CFI’s $18 million debt on restructured terms.
CFI, which announced the deal on Wednesday, owes FBC Bank, Agribank, CBZ, the Infrastructure Development Bank of Zimbabwe, NMB and Standard Chartered a combined $18 million, which will be assumed by Fidelity under the terms of the deal.
In a circular to shareholders yesterday, Fidelity company secretary Samantha Nhende said the debts will be assumed on restructured terms considered favourable by the Fidelity board.
“The terms include a longer tenor of 7 years at an effective cost of 10 percent per annum with a 2-year principal repayment grace period,” Nhende said.
“The assumed debt will be secured by a mortgage bond over Langford Estates. An upfront settlement of $2 million is required and this will reduce the assumed debt to $14 million.”
Nhende said FLZ would raise the $2 million upfront settlement from existing facilities and internal resources.
Langford Estates’ sole asset is 834 hectares of undeveloped urban land located in Harare South and Fidelity plans to use the land to expand its Southview Park high density residential housing scheme, which the group sees as a key contributor to its financial well-being going forward.
“The 5 300 residential stands in Fidelity life Southview Park are almost sold out. There is still considerable demand for properly serviced high density residential stands in Harare and the board believes that Langford Estates should be the next phase of the Fidelity Life Southview Park development,” said Nhende.
“The close proximity of Langford estates to Fidelity Life Southview Park represents an opportunity for the two projects to share infrastructure and bring considerable savings to overall project development costs.”
For CFI — the holding company of several agro-industrial concerns including Agrifoods, Crest Breeders, Victoria Foods as well as retail chain Farm and City Centre — the deal will give it a debt-free slate locally, with the only remaining interest-bearing debt being a long-term facility of $2.3 million owed to PTA Bank.
The group has struggled in recent times, reporting a $3.8 million loss in the half-year to March from $5.5 million in the prior period. Its last full year financials to September last year showed an $8.8 million loss with key divisions underperforming due to lack of working capital.- The Source