The Zambia Privatisation Agency (ZPA) has pleasure in announcing the sale of ZIMCO's 60% shareholding in Lusaka Engineering Company Limited (LENCO) to Amanita Zambiana Limited. The Sale Agreement was signed on 15 November, 1996 by the Minister of Finance Hon. Ronald Penza and subsequently by ZIMCO (In Liquidation) and Amanita Zambiana.
The other 40% shares are held by Piacenza and Intersomer of Italy who each hold 20%. It is ZPA's understanding that Amanita are expected to complete negotiations with the minority shareholders to acquire their 40% stake.
Historically, Lenco had been the country's leading metal fabrication and engineering business, manufacturing a broad range of products for several diverse markets mostly within Zambia. Products have included building materials (nails, door, and window frames, screens and louvers), metal furniture, agricultural implements, and truck, trailer, bus and tank bodies.
Over recent years, Lenco has suffered a severe downturn in turnover and income and had lost its market share to cheaper domestic & international competition. Management accounts for the financial year ended 31 March 1996 showed revenues of K 700 million and operating losses of K516 million.
The ZPA placed the company under a contract with Deloitte & Touche to manage the company's financial affairs prior to privatisation and forestall a possible closure of the business by its creditors.
At the time of the contract with Deloitte & Touche, the company was technically insolvent and unable to meet its obligations, including salaries and wages for its staff. The financial situation of the company required the ZPA to engineer a sale to a strong and well financed private sector company so as to avoid the crisis of liquidation where employees and all stakeholders would have been hurt.
The privatisation of Lenco heralds a new era for the company and creates the basis for a turnaround whereby Lenco can once again become a competitive player in Zambia's new economy.
The new owners have carried forward all employees, although a post-privatisation rationalisation of labour may be necessary. Any employees declared redundant, will be paid their rightful benefits by Lenco.
All employees will carry forward conditions of service which are substantially comparable or better than previous conditions and will receive their future benefits as they qualify. However, the ZPA is confident that there will be an increase in employment for Zambians at Lenco over the next 4 years at Lenco.
The sale comes after almost two years of preparation involving ZIMCO and the Italian minority shareholders to present a unified tender for the Company. In concert with the minority shareholders, Lenco was advertised on two occasions in September 1995 and May 1996.
When Lenco was first advertised for sale in 1995, bids were received from (a) Alro Engineering Limited (b) Dr G Mudenda, Mr Amon Sibande, and Dr Moses Banda (c) Management and Employee Buy Out consortium including, KLEC International Limited OY (Finland), Zambian Engineering Investor Group, and MAN Nutzfahrzenuge Aktiengesellshatt (Germany).
However, no bid was substantial enough to meet Government's and ZPA's objectives and subsequently Lenco was re-advertised in 1996. Amanita was the winning bidder in a contested bidding process which included Mr Maybin Mwinga, Dr M Mwinga, Mr H Hichilema, Mr E C Zebron, Mrs P Zebron and forty-six employees; and Mr Silenda Matale & Ravnstrup Vognsmedie.
Amanita Zambiana is a commodity trading company also engaged in wheat & maize milling and is registered in Lusaka. It is owned by Mr D Casilli (50%) and Mr N Casilli (50%). Amanita is linked with GDC Hauliers operating a fleet of over 400 international trucks, and Corigrain SA a grain dealer.
GDC plan to use Lenco facilities as a truck servicing depot, including building and repairing of trucks while Amanita and Corigrain will use the warehouses for grain storage.
One of the principals of Amanita has long experience in engineering and metal fabrication enterprises, and the group plans to make a serious effort to resuscitate Lenco's engineering business -- and to reassess its market potential after an 18 months programme.
The total consideration at which Amanita has purchased Lenco is K1.8 billion. In addition, Amanita expects to inject several hundred million as working capital with significantly more investment anticipated in the next three years.
In accordance with the transparency procedures laid down by the Privatisation Act 1992 and the ZPA Board, the negotiation of the transaction was undertaken by Professor Jorry Mwenechanya of the University of Zambia as independent negotiator and was assisted by ZPA Staff. The ZPA extends heartfelt thanks to the efforts put in by Professor Mwenechanya.
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