BMC�s turnaround requires P2bn � consultant

Pauline Dikuelo | Friday September 16, 2016 15:51

Appearing before the Parliamentary Committee on Statutory Bodies and Public Enterprises this week, BMC CEO, Akolang Tombale said despite the suggestion, they have not yet approached the government, who has been bailing them out with funding.

“We have not yet asked for the money from government and decided to do it partially. We are trying to push restructuring and right now we have asked for P20 million to modernise the Lobatse Abattoir,” he said.

Last year, BMC engaged a transactional advisor to assist them with the restructuring of the balance sheet as well as seek more cost effective funding options. The advisor was to review the business in two phases and develop a sustainable model, which included addressing the pressing liquidity issues of BMC, especially as a result of high debt exposure.

The consultant was also to carry out due diligence with a view to develop a comprehensive business model.

To better understand, the business advisor was expected to develop legal and regulatory status to assist in transforming the commission and assist raising capital in the private market from debt capital markets or new equity through participation of strategic partners.

“The development of the business model recommended the ongoing cash flows requirement, capital requirements as well as assessment of the completed valuation of the business on consolidation and separately look at its business units, especially the three abattoir plants,” he said.

In addition, Tombale said although government has recapitalised BMC effectively last year by reducing substantial debt accumulated from financial institutions.  The same did not deal with debt accumulated from the government.  He noted that the commission still has high level of gearing within its balance sheet that impacted negatively on cash flow and working capital.

“The issue of availability of cash flow and working capital is still the most difficult that BMC is faced with and the combination of feedlotting and running loss-making facilities increases the financial pressure,” he said.

According to the CEO, the unavailability of the right type of cattle for feeding, insufficient numbers, and poor feedlotting skills as well as the cost of imported feed resulted in poor performance of the commission thus worsening finances.

He noted that since the communal cattle could only be made for EU legibility through feedlotting, it has made traceability in communal areas very poor hence impacting negatively on the central database, an issue that has been a concern for the EU after every audit.

“Because of poor traceability management, movement of cattle in and out of feedlots is one of the biggest challenges facing BMC,” he said.