This in order to ascertain the extent of “mismanagement and corruption”, which has destroyed shareholder value.
This, according to Messina, was necessary in the absence of published accounts. CFI is still to release financials for the year to September 30, a position which led to its suspension from trading on the Zimbabwe Stock Exchange.
Messina is the largest shareholder in the group with a 34 percent stake.
The proposal comes amid reports that the group had reached an agreement to disengage with chief executive Steve Kuipa (who is said to be on leave pending early retirement) while finance director Aquiline Chinamo had exited the group last year over allegations of irregular conduct and impropriety.
In a letter to CFI Holdings dated March 7, 2016, Messina Investments which is a part of British tycoon’s Nicholas Van Hoogstraten family trust said there had been no reasons that had been given for the failure to publish accounts while at the same time the company continued to be mismanaged.
“In the absence of published accounts we propose that an independent forensic audit covering the past six years needs to be implemented and are minded to call an EGM for this purpose unless we receive a satisfactory explanation for the issues that we have raised and the plans going forward.”
The letter signed by Maximillian Hamilton said that is effectively insolvent and needs to be protected not only from so called creditors, “but also from continued mismanagement, dishonesty and interference from parties who have no interest in the company other than their own self interest for what still remains to be plundered”.
CFI was working on a scheme of arrangement for creditors where they had appointed Grant Thornton’s Regis Saruchera to take charge of the process. Because of the process the directors believed that the publication of unaudited results may cause unwarranted alarm as to derail recapitalisation efforts underway as engagement of creditors has just commenced, according to a letter to the ZSE dated 22 January, 2016.
CFI’s proposed scheme hinged on two phases: Recapitalisation and disposal of non-core assets.
According to a 27 November, 2015 letter to its creditors, CFI Holdings Ltd said it planned to offload $19 million worth of assets.
It said prospective buyers for properties valued at $11 million had already been secured.
“The board believes that a scheme of arrangement with the group’s creditors is now the missing link to completing the full turnaround.
“The shareholders are requesting for your support to afford the business a stay of execution and litigation . . . ” read the letter.
However, Mr Hamilton said CFI had no business plan and strategy for its turnaround.
Further, the letter dismissed claims that Messina had been involved in the sacking of senior management.
“When Mr Van Hoogstraten was in Harare last month he was advised by the chairman of the board that a number of senior management including the CEO had been dismissed on instructions from ourselves.
“Neither he or any other person on our behalf had given such instructions, nor was this clearly pointed out to the chairman. Also our representative was not given any explanation for the earlier of dismissal of the finance director.
“In any event shareholders do not have the power to effect such matters.”
According to Mr Hamilton this would appear to be the latest example of “the incompetent, dishonest and cavalier way that the company has been mismanaged during recent years with the results that assets are being sold to pay off inflated so called debts in some cases to the same group of individuals who have been defrauding the company.”
He also called for the allowing of assets of one subsidiary to fund the running losses of another to cease.
“While no business plan, going forward, has yet been produced we understand that the company may currently be attempting to incur even more debt.
“With the actual and projected economic climate in the country, this would be lunacy and can only be another last ditch attempt to steal more money perpetuating the former and current gravy train.”
In response CFI Holdings noted the concerns and said it would convene a board meeting to discuss the issues.
The company’s Achilles heel remains its inability to recapitalise post dollarisation and as more years go by the level of capital required to refurbish and retool several of its plants has also gone up.
The Herald