Hwange Colliery’s creditors have voted to approve a Scheme of Arrangement that will stagger debt repayments, saving the company from going under judicial management, officials said today.
The structured payment plan will stop its equipment being auctioned off for failing to honor obligations and allow the colliery to borrow money from banks for working capital.
“Hwange Colliery is grateful and acknowledges this decision as a watershed and turning point in its strategic plans. The Scheme of Arrangement documents were submitted to the High Court for sanction. Thereafter it will be implementation of the scheme plan,” said managing director Thomas Makore in a statement.
The creditors, in last week’s vote, ‘overwhelmingly’ supported the Scheme of Arrangement, which will afford the company the operating space to implement its business and turnaround plans, he added.
“Hwange Colliery was faced with a plethora of litigations and writs of executions which crippled its operations. 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,” he said.
Makore said the financial resources will be channelled to production activities at opencast, underground and metallurgical operations to increase production.
“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 Makore.
The miner said last month it had signed two off-take deals with the Zimbabwe Power Company and independent power producer Lusulu Power for a combined 400 000 tonnes per month.
To satisfy the agreements, Hwange would need to attain the levels of operational efficiency the company last enjoyed in the early 1990s, when output peaked at 5.5 million tonnes.- The Source