UP FOR SALE! $300 million to own Hwange town
HWANGE Colliery Company Limited (HCCL) plans to sell Hwange town for $300 million to among other obligations offset over $70 million it owes employees in salary arrears dating back to five years.
According to ZBCtv, the shocking development emerged as the company’s board appeared before the Parliamentary Portfolio Committee on Mines and Energy on Monday.
Although the ailing fi rm has reported positive production growth in the first quarter of 2018, it appears this has not translated to improved welfare for workers as financial challenges continue. Wives of the stranded workers have continued to demonstrate at the company’s premises since January this year. Parliament is not impressed with the obtaining situation and has called for a lasting solution.
HCCL chairperson for the technical committee, Mrs Ntombizodwa Masuku told Parliament that they presently require $500 million capital injection to pay off debts and have put on the table an option to sell off the town for $300 million.
The colliery remains in a precarious financial position after reporting a $43.84 million loss in 2017 compared to $89.91 million in 2016.
HCCL has an array of assets that include 5 000 houses accommodating its workers and former employees in the mining town. Among other challenges, the firm has legacy debts, frequent breakdown of equipment, and high production costs, which were causing the company to fail to break even. At present, HCCL is operating under a scheme of arrangement, which its creditors agreed to in May 2017 but is struggling to improve its financial base to recapitalise operations.
It is hoped that the scheme of arrangement is a stepping stone towards the settlement of its more than $350 million debt.
And as part of the contractual provisions under the scheme of arrangement, HCCL has to ensure partial monthly disbursement of outstanding wages to its workers. Due to operational challenges that the company continues to face, HCCL was early this year involved in a labour dispute with its workers, which saw their spouses protesting against management. The employees claim they have not been paid for three years.
HCCL is a strategic entity in the economy and its demise has a negative effect on companies that rely on its supplies including power generation. It is hoped that as the company resumes underground mining, there will be improvement in its bottom line. — ZBC news/ Business Chronicle