Daybreak Farms, a leading poultry producer owned by the Public Investment Corporation (PIC), is planning a R250 million debt deal to stabilise the company and optimise its operations and balance sheet.
This follows a recent successful restructuring programme and the appointment of new executives.
Last year, led by CEO Richard Manzini, Daybreak Farms was restructured and a new executive team was recently announced to support the company’s growth plans.
The company holds about R1.2 billion in assets and was acquired by the PIC in 2015. Manzini, previously from PIC, was appointed in January 2024, having overseen the turnaround of Daybreak in his capacity as a board member prior to his appointment as CEO.
In 2022, the PIC overhauled the board in light of reports of multimillion-rand irregularities and it also appointed new auditors and established a whistle-blowing hotline service provider as part of establishing an ethics and investigations committee.
So, despite the significant challenges in the poultry industry last year, including the outbreak of avian flu in some areas, Daybreak was now tracking towards profitability, Manzini said in a statement yesterday.
He said the main reason why the company had been able to turn around was due to the strengthening of corporate governance.
From July 2023, Manzini had focused on getting financial controls in place. During the avian flu pandemic, the company managed its cash more stringently without access to a revolving facility, or support from the shareholder.
“This lent credence to the fundamental stacking of the business, the cost efficiencies realised and the treasury management,” he said.
“We need about 18 months to sort out the balance sheet, starting with raising the R250m,” Manzini said.
South Africa is the biggest producer of chicken in Africa, producing close to two million tons of chicken a year. Daybreak holds about 7% of the South African chicken market currently, and it anticipates steady growth.
Manzini said the cash raised would be used for technology upgrades of Daybreak’s abattoirs and machines, a water treatment plant, and increasing the speed of the chicken processing systems.
He said Daybreak Farms supplies its own and contracted broiler farms with day-old chicks, which are raised and sold as fresh and frozen whole chickens and portions.
With the power cuts in recent years, fresh chicken portions had become more popular.
“We are planning to tilt one of our abattoirs to focus more on fresh product mix, and we are in talks with a broader client base,” he said.
The plan was to take processing to about 1.9 million chickens a week, from 1.5 million chickens a week, in the next few months, he said.
This initial debt deal, and the restructuring of the company and its balance sheet, might result in an additional investment round to build out its strategic direction as a protein foods business, he said.
“The mission is to get Daybreak, which employs 3 400 people, back to a strong market position, where it deserves to play,” said Manzini.
BUSINESS REPORT