HARARE: Listed group Fidelity Life Assurance (Fidelity) has acquired 81% of CFI Holdings’ Langford Estates whose principal asset is an undeveloped piece of land valued at $22,3million, as the company seeks to improve earnings in the long term.
A company presentation at an extra ordinary general meeting held in Harare this morning indicated total consideration for the 844 hectare land bank is US$18 million in the form of assumption of CFI bank debts amounting to US$16 million and settlement of US$2 million owed to other creditors.
“Of the assumed bank debts, a US$2 million deposit has been placed in trust with one of the banks pending approval of the transaction by the shareholders (and) the remaining US$14 million will be secured by bonds on the land to be issued by the FLA in favour of the banks once the shareholders have approved the transaction,” read part of the presentation.
Fidelity said US$14 million of the assumed debt will be serviced over seven years at 10% interest per annum. A grace period of two years is also given on the principal payment. Additional insurance income from the project of US$8, 7 million will be realised, said the company. Fidelity said the stands will be sold at 10% interest per annum.
Located next to Fidelity’s South View Park, Langford Estate is expected to yield 11 624 residential stands with expected profits of US$81,6 million at 92% return on investment, US$160,4 million at 203% return on investment and US$200 million at 254% return on investment.
Development costs for the project are estimated at US$50 million, mainly comprising US$18 million for road and storm water drains and US$10 million for sere reticulation. Fidelity said the residential stands will be sold at an average US$414, 400 per unit. The project will also have 47 churches, 10 commercial stands, 35 crèches, 3 police stations, one post office, 12 flats, 17 primary schools, 5 secondary schools and four clinics among other social services.
Fidelity forecasts significant development cost savings as a result of utilisation of offsite infrastructure developed by Fidelity Life Southview Park. There company said there will be full utilisation of equipment purchased to develop Fidelity Life Southview Park.-Taurai Mangudhla
