22 December 2011
INTERFRESH shareholders approved the sale of the group’s Graniteside property to Innscor Africa at a cost of US$5, 8 million to enable the group to retire its short-term bank debt of US$4,4 million.
The shareholders present, totaling 343 411 987, all voted for the resolution although concerns had been raised by other shareholders over the valuation and whether or not there had been any takers for the property besides Innscor.
CEO Lishon Chipango told the meeting that an agreement had been put in place with Innscor although there had been a number of offers submitted. Chipango added that CB Richard Ellis had valued the property at US$5,5 million.
After clearing the debt, the group will use up to US$1 million to purchase a smaller head office. Chipango said that the group was looking at a number of property options that are there but none had been confirmed.
Some of the operations will be transferred to Mazoe Citrus Estates. The remainder of the proceeds would be used for working capital, he said. The disposal will have an impact on the group’s financial position with total debt being reduced to US$5 million from US$9,4 million.
It would also reflect a new property cost of US$1 million and an additional cash balance of US$400 000. The transaction would have an effect on the group’s statement of comprehensive income. Based on the level and cost of borrowing at the end of October 2011, the annualised cost of total debt would be reduced from US$1,4 million to US$500 000.
Interest cover would also be expected to improve. In the first half of the year the company announced it had secured US$5 million six-year loan for both working capital and capital expenditure.
The group received UD$5 million funding from IDC South Africa at a cost of 9%. Of that amount US$2, 5 million had been put into capex and the rest on working capital.
The other US$2,5 million has been set aside as working capital chiefly to rework the distribution channels.
The group also indicated that a balance sheet restructuring, reduction of both short-term borrowing and reduction of effective cost of borrowing was in progress.
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