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Send  Share  RSS  Twitter  20 Sep 2009

VENTURES: Lusitania's Parent Out Of Public Eye

 



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KING Consolidated Holdings – the holding company for Cape-based seafood distribution business Lusitania Food Products – will be bought out by controlling shareholder, the Pocot Trust.

The move to shift Kingco out of the public eye is not surprising after CBN reported last month that the group was struggling to eke even a semblance of profitability from Lusitania , which was starting to take a terrible toll.

Kingco not only suffered the indignity of having its auditors question its ability to continue as a going concern but the group found itself indebted to the tune of R38 million to the Pocot Trust.

The Pocot Trust is associated with Kingco’s current CEO and controlling shareholder, Tony Cotterell, who is a successful transport entrepreneur based in East London.

With Lusitania still racking up sizeable losses (despite several attempts to restructure the business towards viability), there seems no prospect of Kingco being able to service its debt to Cotterell.

Kingco reported a loss of R15.6 million from turnover of R235 million in the year to end February 2009.

During that period the closing down of Lusitania’s processing division caused an additional once-off expense to be incurred for that financial year.

Cotterell will now offer Kingco shareholders 40c/share for the roughly 2 million shares the Pocot Trust does not already own – an exercise that will set the Eastern Cape entrepreneur back not much more than R500 000.

The big question for CBN is what Cotterell’s intentions are with the lagging Lusitania once Kingco is taken private.

It would seem that Kingco’s pub’n grub and restaurant businesses – including the Keg, McGinty’s, Sadles and Mike’s Kitchen - still has some good prospects over the longer term.

Separating Lusitania from the pub/restaurant business would make sense, and in this regard CBN wonders whether Cotterell will give thought to selling off or even closing down Lusitania.

Last time Cotterell commented on Lusitania he noted the curtailment of costs from rationalisation efforts as well as the expected reduction in transport related costs which may benefit the business.

But this would not be the first time there’s been misplaced optimism around Lusitania.

Some years ago there was speculation that Sekunjalo’s Premier Fishing might be willing to take Lusitania off Kingco’s hands. But unless Cotterell can engineer a miracle turnaround at Lusitania in the short-term, this business may not be fit to give away…


 
 
 
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