Hitting a brick wall: Willdale is selling its land in Mt Hampden to turn around troubled business

Brickmaker Willdale hopes selling off its idle land in the in-demand Mt Hampden area will raise the money it needs to turn around its flagging fortunes.

The company will hold an EGM in April to seek shareholder approval to develop and sell off 178.2 hectares. The land is valued at US$3 million, but the company believes it can fetch more money if it develops the land first, and then sells stands. The company has missed out on demand from construction because of its aged plants.

Willdale plans to develop an area called Haydon, on 123.6 hectares, which Willdale values at US$1.1 million. The company used to extract clay for bricks from the area, but the land has gone idle and is run over by illegal brickmakers. Willdale is in court to evict them.

Says Willdale: “The Management and Board have seen this as an opportunity to develop the land, add more value that would otherwise be achieved through an outright sale and use the proceeds to expand the production capacity of the company’s plan though acquiring modern driers and kilns.”

At Haydon, Willdale is contracting construction firm Zusammen to develop 449 residential stands, 18 industrial stands, and other properties. Zusammen will spend US$19.47 million on the development, and then sell the stands on Willdale’s behalf.

Another Willdale piece of land, Kinvarra, sits on 42ha near the proposed Cyber City site. The company believes that being near Cyber City is “an opportunity to take advantage of this nearby development to add more value to this idle piece of land”. Willdale has contracted Melrose Construction to develop the site. The company also plans to develop, in future, more idle land in Gweru.

Willdale expects to earn US$16.6 million from all the sales, before costs.

“Profit on the disposal of stands of US$16,576,412 less capital gains of US$976,169, selling costs of US$780,935 and transaction costs of US$60,000 plus a decrease in deferred tax liability of US$147,348 and transfer from revaluation reserve of US$1,072,072.”

The company hopes to use some of the earnings to buy a new US$3 million plant, which it desperately needs to catch up with thriving competitors. The company’s old plants and high costs have seen it struggle to meet orders from customers. It has to shut down for three months each year, between December and February, because it uses the sun to dry bricks. Sales volumes fell by 5% in the year to September and were down by 9% in the December quarter.