• Tue. Nov 29th, 2022

RBZ pays US$170k towards Bridgefort Capital legacy debt

ByEconomic Times

Nov 16, 2022

By ETimes

Bridgefort Capital, a Zimbabwe Stock Exchange (ZSE) listed firm, has said the Reserve Bank of Zimbabwe (RBZ) paid part of its legacy debt in Q3 to September 2022.
 
The company has been on record saying the failure to expunge its legacy debt has affected their ability to deal with their suppliers
 
“A payment towards the MedTech legacy debts of US$170,000 was received at the end of October after which US$640,000 remains outstanding. This was a pleasant development and a partial relief to suppliers,” the company said.
 
However in the period the company suffered volume losses across the line.
 
In a third quarter trading update, the company said, “The third quarter sales volumes dropped by over 67 percent for distribution and 58 percent for manufacturing compared to the third quarter of 2021, largely as a result of the huge drop in supermarket sales and demand in general.”
 
The significant decline was as a result of the policy changes, and was mostly felt from August.
 
According to Bridgefort Capital, the tight fiscal and monetary stance is achieving the desired results and is an encouraging step in the right direction.
 
“The impact has however been a significant drop in the real value and volume of sales. Such significant policy changes are inevitably painful although we envisage some recovery in sales as the market recovers from the shock as the year progresses,” the company said.
 
In the period under review, official exchange rates moved from $366 to a dollar at the start of the quarter to $622 at the end of September. This increase in the rate of 70 percent was largely a correction bringing the exchange rate more in line with market conditions.
 
This has resulted in a decrease in the parallel market premium from around 88 percent to 21 percent over the quarter. The company also noted that the impact of more realistic exchange rates, and a reduction in arbitrage opportunities, is a positive development.
 
As for future investments, the company said “Transactions continue to be pursued to expand the portfolio investments of the company and shareholders will be advised in due course of further developments in this regard.”
 
Whilst a number of transactions have, and continue to be pursued, the company’s focus has been placed on two transactions which they said neither is likely to be concluded in the short term.  This was due to the depressed prices currently prevailing on the ZSE, so focus has therefore shifted to other transactions in the pipeline.
 
In their outlook, Bridgefort Capital said the market seems to be recovering somewhat from the policy changes mentioned and some increase in liquidity is being felt.
 
“It is, however, difficult to provide a meaningful outlook as this may be influenced by government policy changes,” the statement read.
 
In order to mitigate against the drop in local currency demand through the formal retail outlets, the company said its consumer goods business is pursuing sales channels into the informal sector – Harare

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