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<\/a><\/p>\n2 December 2011<\/p>\n
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INTERFRESH Limited directors are seeking shareholders’ approval at an Extraordinary General Meeting next month to raise US$5,8 million to retire debt.<\/p>\n
In a statement to shareholders, company directors proposed to raise funds through the disposal of its two properties in Harare. Proceeds of the disposal would be directed towards servicing the group’s short-term debt, which currently stands at US$4,4 million.<\/p>\n
The balance of the money would be used to purchase a smaller property to house the head office at an estimated cost of US$1 million and the remaining US$800 000 would finance working capital requirements.<\/p>\n
“The level and cost of short-term debt is unsustainable.<\/p>\n
“The rolling over of short-term borrowings is becoming increasingly difficult with the risk of higher rollover fees and even higher interest rates,” the group said.<\/p>\n
The disposal will have an impact on the group’s financial position with total debt being reduced from US$9,4 million to US$5 million. It would also reflect a new property cost of US$1 million and an additional cash balance of US$400 000.<\/p>\n
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.<\/p>\n
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.<\/p>\n
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.<\/p>\n
During the period, Interfresh discontinued Guruve Citrus projects and the flower business. They also changed the fruit and vegetable business models from retail to wholesale.<\/p>\n
Interfresh has struggled in recent years at its Mazoe Citrus Estates to increase citrus production from its 650 hectares of orchards.<\/p>\n
In the six months to June 2011 group turnover declined 32 percent to US$4,6 million from US$6,7 million to the comparable period, largely due to working capital constraints.<\/p>\n
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