After Daybreak Foods received an emergency payment from the Public Investment Corporation (PIC) in May this year, it was decided two weeks ago to give the beleaguered poultry producer’s business rescue a further R150 million.
By Michelle van der Spuy
Netwerk24 reports that the PIC decided on further payment, as the initial R250 million was insufficient to settle its debt to creditors.
Kabelo Rikhotso, Chief Investment Officer of the PIC, stated in a session of the Standing Committee on Public Accounts that this was one of the reasons why a further payment was made to Daybreak Foods’ business rescue.
The fact that Daybreak’s hatchery remains operational also contributed to the PIC’s decision to allocate a further R150 million. However, Daybreak Foods is not allowed to be fully operational due to an interdict obtained by the National Council of SPCAs (NSPCA).
The Path to Business Rescue
During the session, Rikhotso revealed that the PIC initially did not want to put Daybreak Foods into business rescue. It was believed that other financiers would emerge, but this did not happen.
After creditors dragged Daybreak Foods to the High Court and filed an application for the company’s liquidation, business rescue could no longer be avoided. More than R400 million was owed to those creditors. As soon as payments were made to the creditors, Daybreak Foods was placed in business rescue.
Tebogo Maoto was appointed as the business rescuer on 22 May. A business rescue plan is expected to be released on 22 August.
Daily Maverick reported on 29 May that the business rescue process soon hit its first hurdle when the company’s IT services were suspended due to default.
A payment of R1.4 million was made on 31 May. Still, the service provider, Altron Digital Business, refused to restore services due to an unpaid historical debt that is now part of the business rescue process.
BusinessLIVE reports that David Masondo, deputy minister of finance and chairman of the PIC, said in a briefing before the session that the PIC did not intend to continue to provide money to Daybreak Foods. He reportedly went on to say that although the PIC believes that the poultry producer can be saved, the funding to the business rescuer is not sustainable. The PIC therefore wants the business rescue to be completed as soon as possible.
