Telecel placed under corporate rescue
TELECEL Zimbabwe has been placed under corporate rescue as creditors work to save the business and defend it from a number of lawsuits. A court plea made by the Communication and Allied Service Workers Union of Zimbabwe in October of last year triggered the rescue case.
In his application filed at the High Court, David Mhambare, the union's secretary-general, said the country's third largest telecommunications firm was insolvent and faced liquidation if no rescue action was immediately taken.
Knowledge Hofisi of Aurifin Capital was nominated as the corporate rescue manager.
A notice in the Government Gazette published last week revealed that the corporate rescue proceedings have begun in terms of section 124(2)(b) of the Insolvency Act [Chapter 6:07].
“Notice is hereby given to the shareholders, employees and other creditors of Telecel Zimbabwe (Private) Limited that a court application for the placement of the above-mentioned company under supervision was filed with the High Court of Zimbabwe (Commercial Division), Harare, on the 10th of October, 2022 under Case
H.C. 306/22.
“It follows therefore that corporate rescue proceedings have commenced in terms of section 124(2)(b) of the Insolvency Act [Chapter 6:07],” the notice read in part.
The notice indicated that in terms of section 125(1)(b) of the Insolvency Act [Chapter 6:07], corporate rescue proceedings are deemed to begin when an affected person applies to the court for an order placing the company under supervision in terms of section 124(1) of the said Insolvency Act.
“It follows from the foregoing that no action or proceedings shall be proceeded with or commenced against the company except by leave of the court and subject to such terms as the court may impose.
“Further, in terms of section 126 of the Insolvency Act [Chapter 6:07], during corporate rescue proceedings, no legal proceedings, including enforcement action, against the company, or in relation to any property belonging to the company, or lawfully in its possession, may be commenced or proceeded with, without the leave of the court,” the notice added.
According to the notice, in terms of section 124(3) of the Insolvency Act [Chapter 6:07], each affected or interested party or person has a right to participate in the hearing of the application in terms of this section and may appear before the High Court (Commercial Division), to show cause why an order for corporate rescue proceeding should not be made placing the respondents under corporate rescue proceedings and ordering that the costs of these proceedings shall be the costs of corporate rescue proceedings.
Mhambare's court appeal further notes that Telecel had US$1,5 billion in assets as of December 31, 2021, compared to local currency liabilities of $24 billion, which have resulted in a $22,5 billion negative equity.
Mhambare said corporate rescue was the best option given the situation since it gives Telecel the chance to rebuild the business while also obtaining a stay against the execution of judgements by litigants.
Worldwide, the telecom industry is investing in 5G, and in Zimbabwe, 4G/LTE spending has surged.
In contrast to its rivals, Telecel, according to Mhambare, had not made sufficient investments in the implementation of 4G/5G networks.