Tuesday, October 30, 2018

Hwange Put Under Reconstruction . . . Administrator Moves In
31 OCT, 2018 - 00:10
Tendai Mugabe
Senior Reporter
Zimbabwe Herald

Government has put Hwange Colliery Company under reconstruction in a bid to set it on the course to profitability.

The company is heavily indebted and owes the Government in excess of US$150 million, with its liabilities outstripping the value of its assets.

Government, which owns 52 percent stake in the company, announced the reconstruction exercise in an Extraordinary Government Gazette published on Monday.

The Extraordinary Government Gazette reads: “(a) The Minister of Justice, Legal and Parliamentary Affairs (Ziyambi Ziyambi) hereby in terms of section 4 of the reconstruction of State-Indebted Insolvent Companies Act (Chapter24:27) (No.27 of 2004) issues a reconstruction order in relation to Hwange Colliery Company Limited.

“(b) Appoints Bekithemba Moyo, the co-founder and director of DBF Capital partners having its principal place of business at No 2 Downie Avenue, Belgravia, Harare, to be the administrator of the company under reconstruction.”

Other members of his team include Ms Mutsa Mollie Jean Remba, who is the current managing director of Dube, Manikai and Hwacha who will be serving as the assistant administrator and Mr Munashe Shava who is the chief operating officer and project leader at the Great Dyke Investments.

Mr Shava is also going to serve as the assistant administrator.

The gazette further reads: “Direct that, from the date of publication of this order — the company under reconstruction shall be under the control and management of the administrator, and the boards of the companies under reconstruction shall be divested of the control and management of the companies’ affairs and any person managing or controlling the companies’ affairs in any capacity other than as 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.”

Sources close to this matter confirmed to the Herald yesterday that the administrator had hit the ground running and yesterday had already moved in at Hwange Colliery offices in Harare.

“The administrator has already moved in as the parent ministry moved in line with its set goals of meeting the 2030 Vision targets as enunciated by the President,” said the source.

Top Harare lawyer Advocate Lewis Uriri said the effect of the extra ordinary Government Gazette was that Hwange Colliery board had automatically dissolved by operation of the law.

“This means that the board function now vests in the administrator,” he said.

“The underlying rationale is that this is a state enterprise that is insolvent because of failed management. With a different manager the fortunes of the enterprise may be turned around and its operations “reconstructed”. This is the equivalent of corporate rescue provisions such as judicial management. The staff remains in place but the policy and strategic vision ordinarily reserved for the board is now vested in the administrators who will now direct management.”

A senior manager at Hwange Colliery Company last week had hinted that Government might consider reconstruction of the company given a myriad of challenges it was facing.

“Government may consider a reconstruction exercise which works in three principles. The first principle is that Government has to be owed money, the second works on the basis that the company is insolvent and the third principle works on the basis that if properly reconstructed, the company can turn around the fortunes and Hwange fits in all those three. Firstly, because it owes money to Government in excess of US$150 million, secondly its liabilities far exceed its assets and thirdly it’s a good asset which if properly run, should be able to operate profitably. Therefore, based on that, there is merit in having the company reconstructed.”

No comments: