Evraz Highveld Steel expects to pay a higher dividend to its creditors
BUSINESS Rescue practitioners at Evraz Highveld Steel and Vanadium, South Africa’s second largest steel producer that went bust in 2015, expect to pay a higher dividend to its creditors in anticipation of the sale of its structural mill.
Piers Marsden, a business rescue practitioner at Matuson & Associates, told creditors during a meeting held in Sandton yesterday that the dividend payout had been revised to 15 cents from a previous 10c.
“The revised potential dividend is 15c based on our forecasts. We anticipate that the dividend will change once we deliver our strategic assets,” said Marsden.
Asked how soon creditors would be paid, Marsden said it would take up to two years.
“If we are able to sell the plate mill, within 18 to 24 months we will be in a position to pay concurrent creditors,” he said.
Highveld’s financial woes have had dire consequences not only on its 1 800 employees, but on the economy of eMalahleni in Mpumalanga, its suppliers and the community where unemployment is rife.
However, the official restart of the heavy section steel mill in eMalahleni is a glimmer of hope.
Highveld signed a contract manufacturing agreement in December 2016 with ArcelorMittal South Africa (Amsa) through which Amsa will supply blooms and slabs to Highveld for processing into heavy structural steel.
The Highveld heavy section mill was restarted for production in April 2017 and was expected to ramp up to full production by November depending on market demand.
“The structural mill is the single most positive development to come out of the business rescue process,” said Marsden.
Highveld started to deliver 4 100 tons of prime product to Amsa in April and had the ability to ramp up to 18 000 tons a month.
“For those who are suppliers in the mill should see some income being generated,” said Marsden.
Highveld owes creditors R2.3 billion, including employees, and the Industrial Development Corporation (IDC).
The company was prioritising paying employees who have received R50 million out their R330m retrenchment packages owed to them.
Highveld also owes the IDC R150m for a loan it received to fund its working capital requirements.
The company began paying interest on the loan last year.
It also owed R680m of tax to Sars for the years 2007 and 2009. It was also regarded as a serial environment offender with concerns on air emissions.
Evraz went into business rescue in 2015 and suspended its listing on the JSE as a going concern.
It sold its lime and some of its titanium resources for R683.5m. It had already received a R43m payment with the balance payable over a period of two to ten years.
Marsden said the company was negotiating the sale of the balance of titanium resource, iron plant and the plate mill.