The Zimbabwe Asset Management Company (Zamco) has agreed to purchase Star Africa’s $32.7 million liabilities in a debt-equity swap arrangement that will give the asset manager about 50 percent control of the sugar manufacturer.
Zamco is a special purpose vehicle set up by government in 2014 to purchase non-performing loans from banks and clean their balance sheets. It has previously also purchased bad debts from resources group RioZim, apart from those of financial institutions.
Star Africa owes BancABC $15.8 million, Afreximbank $10.9 million and the Infrastructure Bank of Zimbabwe $2.1 million.
It also owes the now defunct AfrAsia Bank Zimbabwe $2.5 million and Stanbic Zambia and Intermarket Bank Zambia $600 000 and $659 000 respectively.
The debt-equity swap arrangement is expected to be approved by shareholders at the company’s extraordinary general meeting to be held on November 17.
The conversion price will be $0.0125 per share, and will give Zamco a 48.43 percent stake, making it the largest shareholder in the firm.
“Star Africa will issue to ZAMCO cumulative, convertible, secured, redeemable Preference shares with a tenure of 8 years and a coupon rate of 7 percent per annum payable quarterly in arrears. The preference shares are redeemable or convertible into ordinary shares of Star Africa after 8 years,” said Star Africa in a statement.
Star Africa also proposed conversion of other debts into shares.
Starafrica owes concurrent creditors $14.4 million with statutory creditors being owed $5.2 million.
“The $5 258 724 owed to Statutory creditors will be restructured on terms agreed on a bilateral basis. For the other concurrent creditors Star Africa will enter into a scheme where concurrent creditors will be issued with a 5-year, 7% loan that will be convertible into Star Africa shares at the option of the holder, ” said the company
National Social Security Authority conversion price will be $0.0075 per share and concurrent creditors amounting to $9 million will be $0.0125.
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