HCCL drops rights issue discussions
HWANGE Colliery Company Limited (HCCL) has suspended discussions involving a rights issue and private placement as the firm’s process for a scheme of arrangement with creditors is at an advanced stage.
The colliery’s debt is estimated at $300 million.
In a notice to shareholders, HCCL said after consultations with major stakeholders and professional advisors, it had found it prudent to pursue a debt management plan ahead of any capital raising initiatives.
“As such the company has suspended discussions involving the rights issue and private placement and is at advanced stages of a scheme of arrangement with creditors,” said HCCL.
Once the country’s largest coal producer, HCCL said pursuant to granting of the High Court order authorising the convening of scheme meetings, the firm was finalising engagements with its creditors for a mutually acceptable debt management plan.
The creditors and shareholders of the firm would be notified in due course of the scheme meeting date, time and venue.
“Pending finalisation of the foregoing discussions, shareholders and members of the public are advised to exercise caution when dealing in the company’s shares and to consult their professional advisors before dealing in the company’s shares,” reads the notice. Speaking by telephone yesterday, HCCL managing director Mr Thomas Makore said the rights issue was something his organisation will revisit and consider after the scheme of arrangement. “At this stage, we can’t say how much we need to raise through the rights issue; the scheme of arrangement will allow us to restructure our balance sheet. “In other words, we view the scheme of arrangement as something that will allow us to unlock value and raise fresh capital,” he said.
Meanwhile, the Government has announced plans to clear a significant portion of HCCL’s Hwange Colliery Company’s debts by early next month to pave way for the implementation of new strategies aimed at reviving the company.
Strategies being mooted by the Government include selling some of the company’s houses to employees to offset salary arrears presently sitting at $59 million while $69 million worth of debt will be converted to equity.
The Government is looking at shedding off some of the firm’s non-core operations, including rationalisation of its workforce from the current 3 200 to levels that are commensurate with production. — @okazunga