Harare – The Scheme Chairperson of Hwange Colliery Company Limited, Andrew Lawson on Friday issued a statement on the Zimbabwe Stock Exchange confirming the High Court’s order which sanctioned the scheme of arrangement between the Company and its creditors saying it is still in full force and effect.
In 2017, the firm which has a legacy debt of $352 million entered into a Scheme of Arrangement with creditors.
The firm’s scheme of arrangement was sanctioned by the High Court in May 2017 following approval by the majority of HCCL’s creditors in April the same year.
As part of the contractual provisions of the scheme of arrangement, HCCL has to ensure partial monthly disbursement of outstanding wages to its employee creditors
Continued operational challenges have seen Hwange Colliery Company Limited (HCCL) fail to pay its creditors on time as agreed under the scheme of arrangement.
“On 10th May, 2017, the High Court of Zimbabwe sanctioned a Scheme of Arrangement between the Company and its creditors in terms of Section 191(2) of the Companies Act.
“This Order of the High Court remains in full force and effect, and has not been set aside by anyone. It binds ALL of the creditors of the Company to the terms and conditions of the Scheme setting out how the creditors will be repaid in the future,” said Lawson.
However, Lawson challenged Government’s decision to place the miner under administration to allow it to recover and potentially return to profitability.
Companies going through reconstruction are controlled and managed by an administrator and boards of such companies are divested of the control and management of the companies’ affairs.
“Notwithstanding this High Court Order, on 26th October 2018 the Minister of Justice placed the Company under Administration in terms of the Reconstruction of State Indebted and Insolvent Entities Act. The Minister of Justice has since approached the High Court seeking to confirm his reconstruction Order of the Company.
“On the strength of the original Court Order sanctioning the Scheme and in order to protect creditor’s interests, and in my capacity as the Trustee of the Scheme, I have filed an opposition to the Minister’s application. While the legal process in connection with the reconstruction is ongoing, I shall soon convene a creditors meeting to map the way forward in the mutual interests of both the Company and its creditors,” added Lawson.
The company has old equipment which has resulted in high production costs. Employees are owed up to $70 million and HCCL is considering selling the Hwange Town so as to pay off the obligations.
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