Evraz rescue plan collapses
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