Struggling beef processor Cold Storage Company (CSC) has terminated contracts of a number of employees as its United Kingdom-based investor Boustead Beef (Pvt) is struggling to revive the company.
Boustead Beef promised to bring back to life struggling CSC after affirming to inject a total of US$400 million over the next five years to revive the company that had become dormant in the last two decades.
In March 2019, government signed an agreement for a joint venture lease with the UK-based investor for a period of 25 years.
Under the deal, Boustead Beef was to finance the rehabilitation of some CSC farms where cattle fattening used to take place.
The UK investor promised to bring in new state-of-the-art equipment to kick-start operations, promising to ensure the company would be operating at 50% capacity in six months from the signing of the agreement, but nothing has materialised.
However, Southern Eye has established all has not been well at CSC amid reports that the UK investor is still searching for capital, with workers always facing constant threats that they will lose their jobs because of lack of funding.
According to insiders, an attempt by the UK investor to woo capital from some potential Chinese and South African financiers has not yielded fruits. The Chinese and South African financiers visited the CSC Bulawayo branch recently.
Reports have indicated that Boustead Beef is just a start-up enterprise with a thin balance sheet not enough to turn around CSC.
Just recently, tens of employees had their contracts not renewed on grounds they had reached retirement age while other workers have been given notices of eviction from CSC rented premises in the city.
“Of course, they had reached 60 years, but what had been happening over the years was that CSC would renew their contracts. This time, the new management has said more employees will be laid off as the company is not generating enough money,” one of the workers said.
There are also indications that some CSC machinery and other scrap metal is also being sold, while workers residing at company premises have also been notified of eviction, a claim that could not be independently verified.
“The management is saying that it will start sinking money into CSC only after it gets title deeds for properties from government. What makes us query this investor is that the agreement says it is a lease, not a sale of CSC to Boustead Beef,” another worker said.
CSC MD Nick Havercroft, who has not missed an opportunity to promise CSC revival, refused to comment.
CSC is saddled with a debt of over $25 million mainly from fixed costs such as wages, rates and taxes on land, and has embarked on a turnaround strategy, which was approved by government recently.
The meat processor owes workers over $2 million in outstanding salaries. Former employees are owed over $3 million in gratuities.
CSC’s Bulawayo complex is the largest meat slaughtering facility in Africa and only trails Botswana Meat Commission in terms of the latest technologies.
At the attainment of independence in 1980, CSC was one of Zimbabwe’s major foreign currency earners, as it exported thousands of tons of beef to the European Union (EU).
At its peak, the beef processor and marketer used to handle up to 150 000 tonnes of beef and associated by-products annually and exported to the EU, where it had an annual quota of 9 100 tonnes of beef.