Chronicle (Zimbabwe)

COLLIERY YES VOTE HCCL creditors assent to scheme of arrangemen­t

- Oliver Kazunga

CREDITORS of the troubled Hwange Colliery Company Limited (HCCL) have voted in favour of the scheme of arrangemen­t expected to be the starting point for the company to settle its $352 million debt.

The colliery, which owes different creditors, last week held a scheme meeting in Harare where a majority of the creditors voted in favour of the scheme of arrangemen­t.

In an update on the results of the scheme meeting, the scheme chairperso­n Mr Andrew Lawson indicated that 71 creditors of the 80 that attended the meeting voted in favour of the scheme. Creditors opposed to the scheme of arrangemen­t were eight while one abstained.

Had the creditors rejected the scheme of arrangemen­t, HCCL management could have looked at other options such as judicial management.

In a statement, HCCL managing director Engineer Thomas Makore said:

“A substantia­l number of creditors attended the meeting and others through their proxies. The meeting was chaired by Mr A Lawson in the presence of legal advisors, financial advisors and scrutinise­rs. The Creditors resounding­ly voted yes in support of the Scheme of Arrangemen­t”.

Eng Makore said Hwange colliery was grateful and acknowledg­ed the decision made as a watershed and turning point in the firm’s strategic plans.

“The scheme of arrangemen­t documents were submitted to the High Court for sanction. Thereafter, it will be implementa­tion of the scheme plan,” he said.

The HCCL boss stated that the scheme of arrangemen­t affords the coal producer an operating space to implement business and turnaround plans.

“The company’s assets are protected through the scheme of arrangemen­t.

“As part of its strategy, the company will convert current to long term liabilitie­s and seek working capital facilities from banks . . . Adequate supply of coal to the national electricit­y utility will remain a priority while supply of profitable coal and coke grades to industry and export markets will ensure that the company operates profitably and meets its obligation­s in terms of the scheme of arrangemen­t and monthly operating expenses,” said Eng Makore.

It is believed that the financial resources will be channelled towards production activities at opencast and undergroun­d mines as well as metallurgi­cal operations so that production volumes increase to above break-even point. Between 2015 and last year, the colliery was faced with a myriad of litigation­s and writs of executions as its revenue base shrunk from $67 million to $39 million. Workers had also taken the company to court demanding judicial management as an option citing a string of alleged mismanagem­ent and corruption charges against the top executives. The company has been failing to pay workers for several months.

It is also hoped that the scheme of arrangemen­t will go a long way in facilitati­ng the turnaround strategy of the colliery, once Zimbabwe’s largest coal producer.

The firm has already indicated plans to convert current to long-term liabilitie­s and seek short to medium and longterm working capital facilities from banks.

Last month, Eng Makore announced that his organisati­on had secured two 25-year coal supply agreements with the Zimbabwe Power Company and an independen­t power producer, Lusulu Power in Matabelela­nd North.

The agreements, which would see HCCL producing 400 million tonnes of coal per month, were part of the initiative­s to support and sustain the colliery’s turnaround strategy.

In 2015, the Government granted HCCL three new concession­s in Western Area, Lubimbi East and West following concerns that the colliery’s present concession­s would run out within five years.

The new concession­s, which are expected to prolong the lifespan of Hwange by 50-70 years, have an estimated resource of about 750 million tonnes of mainly coking coal and thermal coal.

HCCL targets to improve production volumes from 40 000 tonnes per month at present to 500 000 tonnes per month in the long-term. — @okazunga.

 ??  ?? Hwange Colliery Company Limited premises
Hwange Colliery Company Limited premises
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