Tinashe Makichi Business Reporter
Industrial Development Corporation will dispose of 76 percent of its shareholding in Chemplex Corporation to raise $60 million required for the recapitalisation of the company.
IDC owns Chemplex, the largest fertiliser and chemical manufacturing company in Zimbabwe.
The company has since dollarisation been facing viability challenges due to antiquated plant equipment and lack of working capital across its investment portfolio.
“The total capital required for the project is $60 million, the dilution level will depend on the valuation of Chemplex. The IDC is prepared to be diluted down to 24 percent from 100 percent,” said Chemplex chief executive Mr Misheck Kachere.
Chemplex mines and beneficiates phosphate rock used in the manufacture of fertilisers and also manufactures sulphuric acid which is subsequently converted to other industrial chemicals.
The corporation has six companies, namely ZimPhos, Dorowa, Chemplex Marketing, Chemplex Animal and Public Health, GD Haulage and G and W Industrial Minerals.
Chemplex Corporation requires $72 million over the next five years to ramp up fertiliser production to enable it to meet the country’s demand.
At present, Chemplex companies such as ZimPhos, Dorowa Minerals and Sable Chemicals are operating at around 8-10 percent capacity.
IDC, which is the parent company, has identified strategic revenue streams for 2015-2019 which could potentially turn over $200 million by year five.
Under the plan, $5,6 million is required for this year and will be used to refurbish the existing ZimPhos and Dorowa plants (at a cost of $1 million) while the remainder will go towards the other operating units including $2,3 million for the refurbishment of Zimbabwe Fertiliser Company.
Mr Kachere said Chemplex was searching for investors to inject fresh capital to replace antiquated plant and equipment within the group.
The Chemplex chief executive was recently in South Africa meeting potential suitors for the company and said the engagement was fruitful but declined to to give details of the meeting.
“The engagement was very fruitful as meaningful progress was made. It is rather too early to disclose the identity of the investors, as this would also prejudice the negotiations,” said Mr Kachere.
“Please be advised that the need for recapitalisation is necessitating the dilution and $60 million is required for the recapitalisation.”