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Zimbabwe: Government Finalises Caps Acquisition

GOVERNMENT has completed the process to take over drug manufacturer, CAPS Pharmaceuticals and Health Care (Pvt) Limited, two entities which used to be part of CAPS Holdings Group, the Financial Gazette’s Companies & Markets (C&M) has been established.

Units under Health Care include QV Pharmacies and St Anne’s Hospital.

CAPS International Limited, whose mandate is to distribute drugs in the region, has not be acquired by government. Geddes Limited, which falls under CAPS International, is also not part of the acquisition.

CAPS Holdings’ majority shareholder, Fred Mtandah, declined to reveal the terms of the agreement but confirmed that the deal had gone through.

Mtandah said: “Yes, the transaction has now been completed. Government put in writing something which I accepted and signed. But I can not disclose the terms of the agreement.”

It was not immediately clear how much had been paid by government for the shareholding, and if the terms entailed cash payment by government.

Abigail Shonhiwa, the permanent secretary in the Ministry of Industry and Commerce who heads the boards of the acquired entities, said: “There is not much I can share with you. You better talk to the office of the Reserve Bank of Zimbabwe. They are handling the payment issues.”

The governor of the central bank, John Mangudya, could not be contacted for comment.

Two months ago, Industry and Commerce Minister, Mike Bimha, indicated that the deal was in limbo, accusing Mtandah of continuously coming up with fresh demands which he claimed government was finding difficult to satisfy.

But Mtandah last week vigorously denied the minister’s claims. He revealed that the deal almost suffered due to bickering within government.

He said: “I never came up with new demands. I have always abided with the 2015 agreement which I signed. It’s them (government) who were changing goal posts. I am just a subject (of politics).”

It is understood that government officials were divided over the deal under factional lines.

CAPS Holdings delisted from the Zimbabwe Stock Exchange on November 30 2011. It was one of the largest pharmaceutical groups on the continent, but ran into problems a few years ago after battling to forestall high gearing.

This resulted in one of its properties, the CAPS’ industrial complex, being auctioned to pay off the debts in 2015. The auction was aimed at raising about US$4 million owed to two major banks-CBZ Bank and FBC Bank.

The auction followed a High Court judgement in favour of the financial institutions, but the property would later be placed on sale by private treaty after it failed to generate viable offers.

Mtandah negotiated with the banks to suspend the sale after an initial auction was not sanctioned by the High Court after the highest bidder offered a price far below the properties’ market value.

If the pharmaceutical firm had lost the complex, which sits on 17 043 hectares of land and is also used as its head office, the development could have spelt doom for the company.

It is understood that CAPS’ debts have now been transferred to the Zimbabwe Asset Management Corporation, a central bank unit that was created in 2014 to take over ailing companies’ debts to banks.

By so doing, government hoped it would give troubled firms the room to recuperate.

Some of the CAPS’ debt was owed by government, which is the largest customer for pharmaceutical products in Zimbabwe.

Government now faces the difficult task of making sure the drug maker returns to viability.

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