PIC backs Daybreak Foods' business rescue plan amid financial crisis

Banele Ginidza

The Public Investment Corporation (PIC) has come out in support of the Daybreak Foods' board of directors' decision to place the company under business rescue.

In a statement on Tuesday, the PIC - a major creditor and shareholder of Daybreak Foods - said it was of the firm belief that the company can be rescued and must be rescued.

The PIC said that business rescue was the best path to preserve the company's value and potential, saving approximately 3 000 jobs, and importantly, to realise returns for clients and their beneficiaries on their investment.

"The successful application to place Daybreak under business rescue paves the way to appoint a business rescue practitioner who will assist Daybreak to assess the extent of disruption to operations and produce a credible turnaround strategy for the business," said the PIC Corporate Affairs.

"In this regard, the business rescue practitioner will work closely with the Daybreak board of directors." 

The PIC said it has already undertaken several measures to contribute towards stabilising Daybreak Foods, which included the injection of R74 million in working capital that was initially intended to address the company’s immediate liquidity needs.

The PIC has also reconstituted the board of directors for Daybreak Foods as part of interventions to stabilise governance and operations, retaining Dr. Cythnia Charlotte Nkuna as interim chairperson to replace Bojane Segooa who resigned with immediate effect after securing payment of R625 000 in board sitting allowances.

The PIC bolstred the board with appointment of new members, including Lehlohonolo Andrew Makenete who is deputy chairperson, Tshokolo Petrus Nchocho, chartered accountant Brian Luthuli Mavuka and Martinus Philipus de Jonge from the PIC, respectively.

Also retained from the previous board were Kgampi Jack Bapela and Esethu Ayanda Dazana.

"The Daybreak Foods board, together with the PIC, will fully cooperate with the business rescue practitioner to implement a sustainable turnaround strategy and plan to stabilise the business and ensure its viability," said the PIC.

This development comes as Lakat Chicken, one of Daybreak's suppliers, had approached the Pretoria High Court for a liquidation application to settle an alleged debt of R19.8m.

In an official response last week, corporate affairs specialist Nokwazi Ngcongo confirmed that Daybreak Foods was exploring avenues to implement business rescue, pending the active participation and agreement from shareholders.

"The board has extensively communicated with the PIC, the company's shareholder, and made numerous requests for funding to support operations, including feed for birds and payment of salaries, and continues to engage the PIC in hope of a positive response," Ngcongo said.

Sam Dlamini, secretary general of the Agricultural Food and Allied Democratic Workers Union (ASADWU), said a coalition of labour and other stakeholders would later this week meet with the Daybreak Foods board on the company's strategic direction following the disruptions.

Dlamini confirmed that workers at Daybreak had been finally paid their April salaries but were still owed for the month of May, according to the remuneration system used at the company.

He said the workers were still at home and only the National Society for Prevention of Cruelty to Animals (NSPCA) was on site handling the stabilisation of the farm in Delmas.

Nazareth Appalsamy, NSPCA farm animal protection unit manager, said the entity was still compiling a criminal case against the Daybreak Foods board.

This is after the High Court last week extended an interim order for the entity to manage the humanitarian crises at the Daybreak farms where more than 200 000 birds had to be culled after poor management and abandonment resulted in cannibalism.

Applsamy said to date, 400 000 birds had been stabilised and were being fed while 200 000 had to be put down.

"We will still pursue criminal action because the actions of the board amounted to animal cruelty" Appalsamy said. 

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