CFOs Calib Cassim and Adrian Maizey unpack how they saved two sinking ships


Calib Cassim and Adrian Maizey reveal the near-death and resurrection of Eskom and Starbucks SA.

On 11 May, South Africa’s leading finance professionals heard how Eskom CFO Calib Cassim and Starbucks South Africa CFO Adrian Maizey took on the task of turning around their companies. Amid boating metaphors, it quickly became clear that both men had to do the nearly impossible: save a sinking ship.

Thrown in the deep end
Almost five years ago, on 27 July 2017, Calib Cassim was called into the office of Eskom’s chairman, where he was asked to take up the CFO hat. “I was driving home from work and I got a call from the previous CFO, Anoj Singh, asking whether I had heard the news that he had been suspended by the Zondo commission,” he told attendees. “I said I would take up the mantle, thinking it wouldn’t be longer than three months before Anoj came back.”

His first decision in the CFO role was not to compromise his values or morals, and to do the right thing for the failing power station. “I thought I was for sure going to be fired within the first three months in the role, because I knew things were going to come across my desk that I didn’t agree with and that I wouldn’t sign them,” Calib explained.

And he wasn’t wrong. In the first week, one of the then-executives of Eskom came to Calib and said they had a solution for the power utility’s liquidity. “There was no paper trail and it would have cost us R400 billion. So I said no way, despite the severe pressure from everyone to sign.”

Again, Calib repeated that you can never compromise on your values as a leader. “It’s not easy telling the board and ministers that Eskom needs R50 billion, but the alternative is the collapse of the entire South African, and part of Africa’s, economy.”

When Eskom was on the brink of collapse, no one was lending the power utility money because its credibility had fallen into disrepute. Calib explained that from August 2017 to January 2018 Eskom didn’t raise a single cent of finance in either the domestic or international markets.

“We needed to start by developing new credibility with our lenders, but to gain trust isn’t easy. You can’t buy it, you have to earn it,” he said.

And so they got to work. “The message from the municipalities was that we had to change the board, get rid of the executive, and appoint people with real credibility,” Calib explained. “Only then would they give us money again.”

In the beginning of February 2018, when Calib looked at the balance sheet, he realised that Eskom would run out of cash and go into default within 30 days. “For the next two weeks, the chairmen and I were driving up and down the streets of Sandton, going to all the banks to try and secure the R20 billion we needed to make it to month-end.”

Because of the credibility the new chairmen and Calib had created in the months leading up to February, the banks gave them the funds they needed. And, because of the continued development of Eskom’s credibility, the power utility currently has enough cash flow for three to four months. However, Calib explained that they are certainly not out of the woods yet.

Driving a speedboat
Having bought 13 Starbucks South Africa stores from Taste Holdings, Rand Capital Coffee CEO and CFO Adrian Maizey told attendees that it was an eleventh hour rescue effort.

So he set out plans to restructure the business model using economies of scale to deliver the international Starbucks experience to more South Africans. ”In order to get this business to actually work, we’ve had to instil an owner-operator start-up mentality,” he explained.

Because the stores were split throughout the country, which meant that they needed management teams based in Durban, Gauteng and Cape Town, Adrian decided to scale rapidly. “Scale helps cover the extensive fixed costs that come with managing the brand and offering of the quality of Starbucks.”

He further explains that the prior owners had a lot of costs built into the structure that were inappropriate for the stage of the fledgling business. His first course of action was to reduce the corporate overhead and move to smaller store formats in lower rental areas outside of malls. “We wanted to move into the neighbourhoods to facilitate building a habitual type of offering, with less dependence on novelty, which is inherent in well-known brands when they first arrive in new markets.”

Just over two years down the line, having ploughed through macro interruptions including the Covid-19 pandemic, looting, metal worker strikes, as well as rolling electricity and water blackouts, Rand Capital Coffee has opened a total of 42 new Starbucks stores in South Africa, bringing its total of stores to 55.

Adrian explains that the Covid-19 pandemic presented Rand Capital with the opportunity to expand Starbucks South Africa, as Covid-19 made much needed market share available. “I don’t think we would have expanded at this rate were it not for Covid-19, as the landscape would not have been as opportunistic as it was,” he says. “The markets imploded, and we went out there looking for new retail space while the rest of the market was retreating and anchoring down in preparation of the storm that was coming. While our growth has been out of necessity, our rate of growth has been out of opportunity. We moved early and fast.”

Rand Capital leased various retail spaces that had become available as previous tenants had to close down from the impact of the lockdown.

Adrian explains that this fast growth was crucial and has resulted in a significant infusion of equity capital into the country during the height of these economically challenging times for South Africa. “We had to build enough profitable stores to cover the corporate losses being incurred on the original 13 stores, hence the need for economies of scale, and we had to do so quickly as the pandemic further exposed the flaws in oversized stores attracting large, fixed rentals. When sales retreat, as they have during the pandemic, the inelasticity of those rentals becomes acutely apparent.”

The two men both agreed that there are many things in life that you can’t control. But when you are agile and flexible, you can navigate any crisis and possibly even save two sinking ships.

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