Government has placed ailing coal mining firm Hwange Colliery Company Limited under administration to allow it to recover and potentially return to profitability.
HCCL, which has been performing badly for several years, has been changing management regularly but that did not translate to a turn of fortunes for the company.
Justice, Legal and Parliamentary Affairs Minister Ziyambi Ziyambi appointed an administrator, Mr Bekithemba Moyo, together with two assistants.
The reconstruction order was made in terms of Section 4 of the Reconstruction of State-Indebted Insolvent Companies Act (Chapter 24: 27) (No. 27 of 2004).
” . . . Bekithemba Moyo, the co-founder and director of DBF Capital partners . . . be the administrator of the company under reconstruction, together with the following assistant administrators under his control and direction –
“(i) Mutsa Mollie Jean Remba, the current managing partner of Dube, Manikai & Hwacha, who shall be the assistant administrator for Hwange Colliery Company Limited; and Munashe Shava, a chief operating officer and project leader at Great Dyke Investments, Harare, who shall be the assistant administrator for Hwange Colliery Company Limited . . . ” reads the order.
HCCL went under administration effective from yesterday.
Companies going through reconstruction shall be under the control and management of the administrator, and boards of such companies shall be divested of the control and management of the companies’ affairs.
Added Minister Ziyambi: “Any person managing or controlling the companies’ affairs in any capacity other than simply a member of the board referred to above shall continue in the office subject to the control and direction of, and be answerable to, the administrator; and confers upon the administrator the power, subject to the rights of the creditors of the companies, to raise money in any way without the authority of shareholders for the purpose of reconstruction of the companies.”
HCCL appeared to be turning the corner after narrowing its losses position by 51 percent to $43,84 million in 2017 compared to $89,91 million in the year earlier, driven by lower cost of sales and increased revenues.
In its first six months to June 30, 2018, the company reported a $23 million loss compared to $24,5 million in the same period last year.
The firm has a legacy debt of $352 million, and had entered into a Scheme of Arrangement with creditors.
HCCL has been honouring the terms of the Scheme until recently, resulting in the suspension of managing director Mr Shepherd Manamike, and finance and administration executive Mr Tawanda Marapira on allegations of sabotage and incompetence.
The company has old equipment which has resulted in high production costs.
Employees are owed up to $70 million and HCCL is considering selling the Hwange Town so as to pay off the obligations.
The HCCL board said it has 345 000 tonnes of coal worth $13 million ready for disposal to meet short-term financial needs.