Revival Plans For CSC Derailed As US$130 Million Boustead Deal Collapses
The government of Zimbabwe has terminated a US$130 million joint venture (JV) agreement with British investor Boustead Beef which was aimed at reviving the Cold Storage Company (CSC) five years after it was signed.
As reported by the Zimbabwe Independent, Boustead Beef will exit the operation due to its failure to meet the terms of the agreement.
The deal stipulated that CSC could terminate the transaction if specific conditions were not fulfilled.
In June, John Mangudya, CEO of the Mutapa Investment Fund (MIF), indicated to the Independent that several key aspects of the 2019 JV had not been met.
During the official reopening of CSC in August 2022, Vice-President Constantino Chiwenga said that Boustead Beef had contributed only US$24 million to the operation, a stark contrast to the commitments outlined in the Livestock Joint Farming Concession Agreement (LJFCA).
A letter dated August 2, 2024, addressed to the Attorney General’s Office and obtained by the Independent, confirms the termination of the agreement.
The letter, signed by Garise Nheta, the permanent secretary in the Ministry of Lands, Agriculture, Fisheries, Water and Rural Development’s legal advisor in the transaction, states:
This letter serves to inform your office that we confirm that the agreement was duly cancelled.
The letter also stated that any additional developments would be communicated in due course.
A separate Supreme Court filing, also dated August 2, 2024, confirmed the cancellation. Reads the filing:
Take note that the second respondent (the Ministry of Lands, Agriculture, Fisheries, Water and Rural Development) hereby files the confirmation letter indicating that the agreement between the first respondent (Boustead Company Private Limited) and the second respondent was cancelled.
The CSC was the applicant in the case, with the Master of the High Court listed as the third respondent.
Speaking in an interview with the Independent in June while on a trip to the Bahamas, Mangudya, who oversees the MIF, a sovereign wealth fund managing state-owned enterprises, including CSC, said:
We have identified that we need to deal with the joint venture, which is not functioning the way it was expected.
That joint venture was signed on the 19th of January 2019. Five years down the line, nothing much has happened on the ground. It needs to be reviewed.
We (need to) pay the creditors, which are there, and it needs money to ensure that we spruce up abattoirs in Marondera, Masvingo and Chinhoyi so that we can start slaughtering and then export. I think Bulawayo is fairly okay.
We have engaged the joint venture holder, which is Boustead Beef, and we have advised them of the need for us to review it.
We have also been discussing with the business rescue practitioner on the same issue. So at the end of the day, we do things in a very amicable manner to ensure that we go forward.
CSC’s creditors include the Zimbabwe Electricity Supply Authority (ZESA), the National Social Security Authority (NSSA), and the urban councils of Bulawayo, Harare, and Chinhoyi.
The 25-year JV gave Boustead control over CSC’s ranches, meat processing facilities, distribution centres, and residential properties in Harare, Gweru, and Mutare, with the promise to invest about US$130 million to rebuild the firm.
Of this, US$45 million was supposed to be invested in the first year, along with an annual rental payment of US$ 100,000 during the first five years.
Thousands of Zimbabwean families relied on the Cold Storage Company (CSC) at its peak in the 1990s, when it held lucrative export quotas for European Union markets. However, the company eventually collapsed due to widespread mismanagement.
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