Cape Empowerment drops fruit JV

2010-01-27 17:02

Cape Town - Investment company Cape Empowerment Trust (CET) [JSE:CAE] has made another disposal in its bid to cull debt.

On Wednesday CET announced the sale of its investment in Rapiprop 159, a property-based fruit farming venture, for R9m.

The interest was sold to fruit marketing giant Capespan, which - along with Total Produce Plc - is already a main venture partner in Rapiprop.

CET said the venture was not considered a core investment, pointing out that its interest in Rapiprop had been diluted to 10% following a recent rights offer.

CET reckoned further capital might be required by Rapiprop, and that dividend flows were unlikely in the short to medium term.

It appears that CET has not made a profit on the sale of its Rapiprop investment. The company's year to end-December 2008 financials reflected an "at cost" value of R10.7m for Rapiprop.

It does, however, appear that Rapiprop - which owns the well-known Applethwaite farm in Grabouw - has been battling.

For the six months to end-June 2009, Capespan reported that Rapiprop had a difficult first half. Fruit volumes were hampered by adverse climatic conditions while production costs increased and sales prices dipped.

CET said the proceeds from the Rapiprop sale would be used to redeem interest-bearing debt.