The Zambia Privatisation Agency is pleased to announce that the Minister of Finance, Honourable R D S Penza, has signed the sales agreement for the the Zambia Concrete Limited with the Fraser Fyfe (Pty) Limited a company incorporated under the laws of South Africa and Poseidon Construction Limited a company incorporated in Zambia.
Zambia Concrete Limited was sold for K125 000 000 ( One Hundred and Twenty Five Million Kwacha), minus liabilities. As the new shareholders are optimistic about the economic future of Zambia, further funds will be invested to upgrade the plant and purchase new equipment to diversify production into other concrete products such as concrete pipes, culverts, manholes and allied products.
Fraser Fyfe/Poseidon propose to contract out some of the services currently being provided in house to some of the employees who will not be taken on. Therefore, although some of the employees will be retrenched, most of them will find themselves in gainful self employment providing among others guard and bus services to the company.
The Fraser Fyfe/ Poseidon bid was selected from amongst other bidders because it presented a competitive business plan and an opportunity for employee participation in the privatisation process. Fraser Fyfe/ Poseidon shall reserve 5% of the share holding to employees for an employee stock option plan.
Depending on the growth in the Zambian market the purchasers will invest over half a million American Dollars (US$ 500, 000) in capital expenditure to repair and replace plant and equipment, and in working capital to ensure the viable operation of the company, and diversify away from the current one product culture of concrete sleepers.
Other bidders for the Zambia Concrete Limited were Mr Moses Chishala and Edward Maembe and Hon Enock Kavindele. Zambia Concrete Limited was initially designated for privatisation as a management buy out. After negotiations collapsed, the company was re-advertised two times on a competitive bid basis and on both occasions deals could not be carried through.
Zambia Concrete Limited was financially troubled company with an operating capacity of less than 15%. The Company made cumulative losses of approximately K900 million over the past five years.The privatisation of the company will therefore cost the treasury funds.
As part of the transparency procedures laid down in the Privatisation Act 1992, the Zambia Privatisation Agency Board, appointed an independent Negotiation Team Chaired by Mr Faustin Kabwe of Access Financial Services, with Mrs Anne Mwenya from the Investment Center as Team Lawyer, and were supported by the Zambia Privatisation Agency technical personnel.
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