STARAFRICACORPORATION Limited chairperson Joe Mutizwa (JM, pictured) stepped down last week after serving it for about a decade. In this interview with our chief business reporter Taurai Mangudhla (TM) this week Mutizwa explains that corporate leadership can be tough, especially when things are not in place. He shares memories of a turbulent nine-year path that started with the company, which owed creditors US$76 million in 2012, facing liquidation. Below are excerpts of the interview:

TM: You stepped down as Star Africa board chairperson last week. Can you share your experience at the company?

JM: I was chairman for nine years from September 2012 to July 22, this year. When I joined the company it was really in distress and I was invited onto the board to try and help or rather rescue the company. It was highly indebted and facing liquidation. In fact, creditors were demanding payment. It was pointing towards closing down or going into administration.

TM: What were the specific problems that were driving the firm down?

JM: There were a number of problems that the company faced. One of them was that it had become too diversified. If I recall correctly, we had around 10 subsidiaries, some of which were not directly related to the sugar business. Its cost structure was bloated and the balance sheet was very weak given the high levels of debt. We started off by restructuring the business portfolio, closing and selling non-core assets and reducing the assets to basically four. These are Gold Star, sugar manufacturing; Country Choice Foods; the property division; and Tongaat Hulett Botswana, where our shareholding is about 33%.

TM: What was the most difficult phase of the restructuring programme?

JM: Obviously in the process of restructuring the business, we had to make a major review of the headcount, which we reduced to sustainable levels.

TM: How exactly did you deal with the debt?

JM: We had to get protection. So we had to get into a scheme of arrangement with our creditors, which was a court function. It gave us protection from people who wanted to take us into liquidation. During the scheme of arrangement, we then started negotiating with the creditors one by one, asking for more time to repay our debts. Then there was the National Social Security Authority (Nssa) as a major shareholder. It went out of its way to help us because other than what I have mentioned, we also had a problem with the plant and equipment. Nssa helped us to do some interim refurbishment of the plant and equipment.

TM: Was this just about everything on the debt restructuring?

JM: We negotiated through Zamco (Zimbabwe Asset Management Corporation), an arm of the Reserve Bank of Zimbabwe, to have it assume the debt that we owed the banks. I think it was roughly around US$34 million. Zamco acquired the debt in return for 57% shareholding in Star Africa. Nssa still held on to their shares. The acquisition by Zamco of the debt owed to banks didnot clear the total debt. There were other foreign-related debts that amounted to around US$7 million, which as you can imagine, with the exchange rate moving, was really a major burden on the company. We set about negotiating with each foreign debt creditor for them to take a haircut so that we could pay off the debt at a lower rate. We used some of our properties to pay off some of the large creditors and we cleared all that during the financial year ended March 31, 2021 except for about US$7 000 which was subsequently cleared post-year end.

TM: How would you assess the situation now?

JM: When I look back I can say that we ended the financial year with zero debt. We ended with a very strong balance sheet and streamlined the business portfolio. All our businesses are doing very well, and are now profitable as you saw in the financial results. On the plant we did a lot of work during the year to get it up to speed, but there is a lot of work to be done still going forward. I always felt that once the company was turned around, my job was done.

TM: What does the future hold in your view?

JM: We have deputy chairperson Rungamo Mbire, who is capable. He is a former Delta executive and he has been on the board for 10 years. In fact, he is the longest serving member of the board, very capable.

And I felt the time for succession had come and recommended to shareholders that they accept Dr Mbire as the acting chairperson when I stepped down. I look back with a sense of satisfaction that when you turnaround the business, it is time to hand it over to somebody else so that they can look at the next journey of the company and take it forward. I leave a very happy man, very satisfied that what looked like a hopeless case is now a viable business.

TM: How much did the company owe when you came in?

JM: Roughly we had about US$76 million total debt.

TM: how much confidence did you have when you came in?

JM: I was a little bit apprehensive. You know, I always like a challenge, for some reason it is part of my nature to go where there are very big challenges, so that is part of what excited me to tackle a problem that looked like you couldnot solve it. One part of me was very apprehensive as well. I left Delta with a very high reputation, a very good reputation. And I was saying am I not going to damage my reputation by going into this? You remember Warren Buffet said when a good manager goes to a bad business usually the reputation of the good manager suffers. I was always thinking about that Warren Buffet quotation.

TM: What would you say was your major milestone?

JM: The biggest milestone was repayment of foreign debt. To be able to pay off US$7 million in a market where foreign currency is hard to come by (is a milestone). We had to take some very bold measures to go to foreign creditors and say hey, look, if you donot negotiate with us and take a big haircut, the company is going to go under and you are going to get zero, so it is in your interest to negotiate. We negotiated haircuts of 50-60%. In some cases it was higher - to get those foreign creditors to accept a new deal. For me that was the biggest turning point.

TM: Well, a job well done at Star Africa. You sit on various boards. But I believe Star Africa took most of your time. Where is your focus now?

JM: I think my biggest next assignment is developing tomorrow’s leaders, future leaders. I have committed the rest of my life to actually dedicate myself to training and developing executives, young managers so that I can make a contribution to developing a cadre of competent leaders in Zimbabwe and abroad.

TM: Would you still make the same choice to join Star Africa if we could turn the hands of time back?

JM: I think I would think twice. I didnot fully appreciate the depth of the problems that the company faced when I went in. Looking from outside one always goes in with a bit of a wrong picture thinking that it is a small problem, I will tackle it and sort it out.

But if I was invited back into that situation knowing what I know now, I think I would think harder before I take it.