(Bloomberg) -- British International Investment Plc, has hired Lazard Inc. to advise it on the way forward for a convertible preference share investment in a Zambian meat producer, according to people with knowledge of the matter, after the firm lost more than a third of its value.

The UK government’s development-finance arm invested $65 million in London-listed Zambeef Products Plc’s securities in 2016, when the market value of the company was about £46 million ($59 million). The Lusaka-based firm had a market capitalization of £28 million on July 4. The instruments are due for redemption on Sept. 16. 

Zambia became the first African country to default on its dollar debt following the pandemic in 2020, which made investors cautious about investing in local companies. This year, companies including Zambeef have also had to grapple with the worst drought in decades and a slowdown in growth that’s forecast at 2.3%. 

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The investment in 2016 helped the UK financier acquire 52.6 million of Zambeef’s ordinary shares and 100 million preference shares. After Sept. 16, BII can convert the preference shares into about 300 million of common stock or redeem for cash.

For BII, the first option would be to swap its shares for cash amounting to about $140 million, two of the people said, asking not to be identified because the discussions are private. 

Zambeef had less than $13 million in cash and equivalents at the end of its last financial year and the company sees this route as “extremely unlikely” in the medium term, according to Zambeef’s latest annual report.

The financier could also convert its preference shares to ordinary stock, the people said. But that would boost its ownership in Zambeef to about 60% and trigger a mandatory buyout offer. BII currently controls 17.5% of the company. 

The other option would be to choose not to redeem the preference shares — or sell some and write off the rest of the investment, two of the people said. 

BII, Lazard and Zambeef declined to comment.

If BII elects not to exercise its rights, it would create an overhang on Zambeef’s share price, the people said. 

The company’s market capitalization peaked at about $300 million in the mid-2000s. 

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