Evraz res­cue plan col­lapses

CityPress - - Business -

The busi­ness-res­cue plan for Evraz High­veld Steel and Vana­dium has been aban­doned af­ter its white knight, the Hong Kong-based In­ter­na­tional Re­sources Lim­ited, pulled out.

High­veld’s busi­ness-res­cue prac­ti­tion­ers an­nounced on Fri­day they would re­vert to their orig­i­nal plan – a par­tial wind-down and break-up of the coun­try’s sec­ond­largest steel maker, which em­ploys 2 000 peo­ple.

This in ef­fect hands the ma­jor­ity share­holder, the in­ter­na­tional Evraz group, the out­come it is fight­ing for in court. It op­posed the In­ter­na­tional Re­sources Lim­ited plan and claimed the busi­ness res­cuers con­spired with the SA Rev­enue Ser­vice (Sars) to in essence fix the cred­i­tor’s vote in favour of the plan late last year. That case is con­tin­u­ing, but is now mostly moot, says Piers Mars­den, one of the busi­ness-res­cue prac­ti­tion­ers.

Sars added an enor­mous R581 mil­lion claim to the list of claims against High­veld based on its in­ves­ti­ga­tion of the ap­par­ent use of an Aus­trian sub­sidiary to il­lic­itly avoid pay­ing taxes in South Africa. That claim has now grown to nearly R700 mil­lion, says Mars­den. Lodged on the day of the cred­i­tors’ meet­ing, the claim threw the vote de­ci­sively in favour of try­ing to sell High­veld as a go­ing con­cern.

The sale failed af­ter the pass­ing of the Jan­uary 31 dead­line for meet­ing all its con­di­tions – with the out­stand­ing is­sue of High­veld’s po­ten­tially enor­mous en­vi­ron­men­tal li­a­bil­i­ties still un­re­solved. In­ter­na­tional Re­sources Lim­ited’s of­fer was con­di­tional on, among other things, govern­ment putting new tar­iffs on steel im­ports and some kind of deal be­ing reached with the depart­ment of en­vi­ron­men­tal affairs on how to deal with High­veld’s pol­lu­tion legacy. This was flagged as the big­gest risk to the res­cue plan when cred­i­tors voted on it.

Mars­den said he did not blame the depart­ment for the fail­ure of the deal as he couldn’t rea­son­ably have asked them to “bend their man­date”.

The fall­back plan is now to sell parts of High­veld as go­ing con­cerns – hope­fully keep­ing them op­er­a­tional and avoid­ing fur­ther re­trench­ments.

“Wind-down does not mean call­ing the auc­tion­eer to­mor­row and chop­ping it up. Large com­po­nents can be sold,” he said.

The sale of High­veld to In­ter­na­tional Re­sources Lim­ited could have given cred­i­tors as lit­tle as 16c of ev­ery rand they are owed, ac­cord­ing to the orig­i­nal plan. The fall­back sce­nario sees this fig­ure drop to 10c.

The amount cred­i­tors can ex­pect de­pends mostly on whether Sars can de­fend its tax claim.

– De­wald van Rens­burg

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