Choppies has announced that it will sell Mediland to Choppies Chief Compliance Officer Vidya Sanooj and Mediland CEO Joseph Scott Senwelo for a token amount of P100. Choppies indirectly owns Mediland through its 76% stake in Kamoso which wholly owns Mediland.
Sanooj and Senwelo have agreed to take over Mediland’s existing evolving trade credit facility obligations of P 40 million to Kamoso and settle them over five years. They have also agreed to retain the 30 current employees of Mediland without making any retrenchments.
"Mediland is currently technically insolvent and Choppies has no desire to inject any new capital into this lossmaking operation," Choppies told shareholders. "Therefore, the Choppies Board has decided to dispose of Kamoso’s entire shareholding in Mediland to S Senwelo and V Sanooj for a nominal consideration of BWP 100.00 as a going concern."
Sanooj and Senwelo will own 95% and 5% of Mediland respectively.
Furthermore, for the duration of the repayment term and while any portion of the revolving trade credit facility remains outstanding, no dividends will be declared by Mediland and all cash surpluses shall be paid by Mediland to Kamoso towards reducing the revolving trade credit facility.
Choppies says that through this transaction, Kamoso will be able to cut losses in the region of P8 million per annum that Mediland had been incurring.