Latest news with #R74-million
Daily Maverick
3 days ago
- Business
- Daily Maverick
Daybreak Foods: Chicken producer hopes business rescue will hatch a turnaround
Creditors and almost 3,000 employees may finally see some resolution as the first business rescue meetings for beleaguered chicken producer, Daybreak Foods, kick off next week. Daybreak Foods, which has been in the spotlight over the past two months for animal cruelty, mismanagement, failure to pay staff and failure to pay contractors, has successfully applied to be placed under business rescue. Under the Companies Act, business rescue practitioner Tebogo Maoto is required to convene the first meeting of creditors and employees within 10 days of his appointment. The first meeting of creditors will be held virtually through Microsoft Teams on Monday, 2 June at 10am. The first meeting of employees will also take place virtually through Microsoft Teams on Tuesday, 3 June at 10am. In a notice, Maoto said the formal agenda for the meetings would be communicated to all affected parties in due course. In the interim, affected parties may address any queries they have directly to Motau at [email protected] In a media statement, the Public Investment Corporation (PIC), a major creditor and shareholder in Daybreak Foods, said it was of the 'firm belief that the company can be rescued and must be rescued, and that business rescue is 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'. Maoto was formally appointed as the senior business rescue practitioner (BRP) of Daybreak Foods on Thursday, 22 May 2025, after the company was placed under voluntary business rescue two days earlier. Maoto has significant experience in the field of business rescue, turnarounds and corporate restructurings, both in South Africa and in cross-border mandates. This extends to the turnaround and restructuring of various non-listed companies, including York Timber, Adax Bioenergy (Sierra Leone), Karstern Boerdery and Premier Hotel OR Tambo. A statement from the company notes that the business rescue proceedings for Daybreak Foods will focus on stabilising its ongoing operations, while Maoto assists with the development of a turnaround strategy and finding solutions to the funding shortfalls of Daybreak Foods. The PIC has already undertaken several measures to contribute towards stabilising Daybreak Foods, which include the injection of R74-million in working capital, intended to address the company's immediate liquidity needs. Daybreak Foods' interim chairperson Dr Charlotte Nkuna commented: 'We welcome the appointment of the BRP as part of the collective effort, together with the Public Investment Corporation, to rescue the Company and save approximately 2,800 jobs. We are confident that the business rescue proceedings will help Daybreak Foods to achieve a credible turnaround plan in the interest of all our stakeholders.' Daybreak Foods has a legal moratorium on any legal and/or enforcement actions being instituted against it, while the company's board and the BRP prepare the necessary proposals to rescue the company from its financial distress. DM
Daily Maverick
23-05-2025
- Business
- Daily Maverick
Daybreak Foods business rescue — a new board fails to instil hope in workers
In a move that's part lifeline, part last rites, the Public Investment Corporation has thrown its weight behind Daybreak Foods' move into business rescue, announcing a freshly reconstituted board and a renewed — if slightly desperate — commitment to saving South Africa's embattled poultry giant. But workers remain unconvinced. On Monday, 20 May, the Public Investment Corporation (PIC) confirmed its support for the Daybreak Foods board's decision to enter business rescue, describing the process as 'the best path to preserve the company's value and potential, saving approximately 3,000 jobs'. With the company's finances resembling a henhouse after a fox visit, the PIC's R74-million cash injection is meant to keep the lights (and incubators) on while a business rescue practitioner is appointed to hatch a credible turnaround plan. Despite a flurry of official statements, a reconstituted board and the promise of business rescue, hope remains scarce on the factory floor at Daybreak Foods. Thousands of workers, partially paid for April, say this development has done little to lift their spirits. One anonymous worker told Daily Maverick, 'We don't have hope now. Our hope for Daybreak Foods is diminished.' They added that they had received only half of their basic April salary and nothing for their overtime. The worker said the company had not communicated anything about these delays, leaving employees in the dark. They are now awaiting their May salary, which is expected to be paid on Friday, 23 May, since the usual payday of the 25th falls on a Sunday. Another employee echoed this sentiment, saying, 'Things are very bad there. They are not being fully transparent with us, and there is no direct communication, so we do not have hope.' The employee said workers simply wanted the truth — no matter how grim — so they can understand the company's current position and know whether they have a future with it. The PIC, which holds the dual distinction of being both a major shareholder and creditor, has made it clear that Daybreak must be rescued, not just for the sake of the workers, but to 'realise returns for clients and their beneficiaries'. Meet the new board Before the feathers hit the fan, the PIC had already reconstituted Daybreak's board. The new line-up reads like a who's who of agriculture, finance and — crucially — damage control: Dr Cynthia Charlotte Nkuna (retained interim chairperson): A poultry vet with an MBA and a background in biologicals. If anyone can spot a sick chicken — or a sick balance sheet — it's her. Lehlohonolo Andrew Makenete (interim deputy chairperson): Agricultural economist and policy wonk. Tshokolo Petrus Nchocho: Development finance veteran, former CEO of the IDC and Land Bank. Kgampi Jack Bapela (retained): Agro-processing dealmaker. Esethu Ayanda Dazana (retained): Chartered accountant and transformation specialist. Brian Luthuli Mavuka (PIC): PIC's head of finance, because someone needs to keep an eye on the purse. Martinus Philipus de Jonge (PIC): Investment executive and former interim CEO of Daybreak — back for another peck at the problem. The board, together with the PIC, has pledged full cooperation with the business rescue practitioner to implement a 'sustainable turnaround strategy.' How did we get here? Daybreak Foods' decline unfolded over several years, marked by mounting financial strain, management instability, and operational breakdowns. Originally part of Afgri, the company was acquired by a PIC-backed BEE consortium in 2015, with high hopes for transformation and growth. However, by 2017, just two years after the acquisition, Daybreak began facing severe financial difficulties amid increased competition from cheaper imported chicken, governance challenges and operational mismanagement. The PIC assumed full control in 2017, but despite efforts to stabilise the company, including board changes and management reshuffles, Daybreak's liquidity worsened. By late 2024, the company had failed to repay R42-million owed to its largest contract grower and defaulted on a R100-million emergency loan. A requested R250-million bailout was declined by the PIC in early 2025, precipitating the resignation of CEO Richard Manzini and the executive team. This leadership vacuum triggered an operational collapse. Feed deliveries stopped, contracts fell through, and workers and livestock were left stranded. Efforts to shift consumer demand from frozen to fresh poultry were undermined by rising feed costs, avian influenza outbreaks and delayed funding. Animal welfare deteriorated drastically, culminating in the mass euthanisation of more than 350,000 chickens under horrific conditions. The National Council of SPCAs intervened with a court order to halt inhumane culling and enforce adequate feeding of nearly 600,000 starving breeder birds. Workers faced unpaid or partial salaries, forced weekend work without overtime pay and poor communication from management, with protests in early May met by the police using rubber bullets. Leadership instability was rife, with four CEOs in four years, legal battles with security firms, and the abrupt resignation of board chairperson Bojane Segooa in May 2025 after securing a R625,000 payout amid strikes and internal conflict. The crisis has since drawn the attention of the Department of Labour, the Congress of South African Trade Unions (Cosatu) and political parties like the Democratic Alliance (DA), which have called for urgent investigations into governance failures and PIC oversight. As Daybreak enters business rescue with a reconstituted board and renewed PIC backing, the challenge remains to restore financial stability, protect jobs and rebuild trust among workers and stakeholders alike. Daybreak Foods' slow unravelling is a stark illustration of the complex challenges facing state-backed enterprises, where financial pressures, governance lapses and social responsibility converge with profound consequences. The path forward demands transparency, accountability and decisive action to safeguard the livelihoods of workers, the welfare of animals and the stewardship of public funds in South Africa's poultry industry. DM
