Plan to save state-owned food producer from liquidation

State-owned Daybreak plans to restart operations at one of its abattoirs and feed mills through an operating partner to begin generating cash, which will allow the company to sustain itself through business rescue proceedings. 

The restart of the abattoir and feed mill will require an additional capital investment, which the company’s business rescue practitioner, Tebogo Maoto, told Newzroom Afrika would not solely come from the Public Investment Corporation (PIC). 

South Africa’s largest asset manager has already pumped over R200 million into Daybreak in 2025 to try to stave off a potential liquidation and fund its business rescue process. 

The PIC initially bought Daybreak for R1.19 billion in 2015, but it has now allocated over R2 billion in capital to the state-owned company to keep it afloat. 

While the PIC expects a recovery of this capital, Maoto asked them to be patient, as it will take time to turn around the collapsed food producer. 

“Let me be honest with you, in order for us to accelerate the recovery, there has to be a capital investment to assist with the reactivation plan,” Maoto said. 

Maoto declined to specify how much money would be needed, but clarified that it would not come solely from the PIC. 

South Africa’s Compensation Fund and the Unemployment Insurance Fund each own 33.3% of Daybreak, respectively. It is unclear whether additional funding will come from these shareholders. 

Maoto explained that the reactivation phase includes restarting some of the company’s operations, particularly those that are cheap to run and can generate cash for Daybreak. 

“The consideration is to restart operations at one of the abattoirs and to also restart operations at one of the feed mills through an operating partner,” he said. 

“We are creating a runway to kickstart the company’s lean operations and generate cash as early as possible, as well as to rebuild operational rhythm over time.”

The focus on select operations will likely come with labour rationalisation as only two of Daybreak’s five divisions are currently operational. 

“At the beginning of business rescue proceedings, we were able to successfully stabilise the breeding and hatchery farms, which incorporate around 500 jobs,” Maoto said. 

“These operations are starting to wash their face and are producing chicks to be used in the rest of the business. We have generated around R20 million in cash from this process so far.”

Maoto said the reopening of the abattoir typically requires around 1,000 employees, but Daybreak cannot afford to hire as many labourers, so it is likely to be fewer. 

“There will definitely be a retrenchment plan that will be put in place to lay off employees. As we ramp up operations, employees will be called back to employment,” he said. 

How Daybreak got here

Apart from outlining the plan to revive Daybreak, Maoto briefly explained how the company ended up in business rescue proceedings in the first place. 

“Daybreak has been badly affected by mismanagement, governance failure and other external shocks that the company failed to deal with,” Maoto explained. 

“Then, there were also regulatory issues as well that impacted Daybreak and continue to affect the ongoing turnaround of the company.” 

Daybreak entered business rescue in May 2025 after reports emerged that it failed to pay staff in April and that thousands of chickens had to be culled due to poor living conditions. 

The National Council of the Society for the Prevention of Cruelty to Animals (NSPCA) said in April it had to cull more than 350,000 birds from various farms that rear them for Daybreak after they were left without feed for days, resulting in mass cannibalism.

The NCSPCA said staff at several sites had not been paid, and thousands of dead chickens were left in the growing sheds.

Following these reports, the PIC gave Daybreak R74 million to provide immediate working capital, which helped it pay staff and improve conditions at some of its farms. 

A month later, in May, the PIC supported calls for the company to be placed into business rescue and gave it a further R200 million to fund proceedings. 

The PIC said at the time that the amount was initially earmarked for capital expenditure and is part of a R250 million facility set aside for the company earlier.

This was a far cry from the Daybreak of the past, when it was one of the country’s largest poultry producers. 

Established in 2001, its operations included the entire poultry value chain, from breeding and hatcheries to broiler farming, feed milling, and chicken processing.

This allowed the company to deliver fresh frozen chicken products to the local market, employing over 3,400 South Africans.

At peak capacity, the business produced nine million birds per cycle of 34 days, making it one of the largest poultry producers in the country.