Oliver Kazunga, Senior Business Reporter
CREDITORS of the troubled Hwange Colliery Company Limited (HCCL) have voted in favour of the scheme of arrangement expected to be the starting point for the company to settle its $352 million debt.
The colliery, which owes different creditors, last week held a scheme meeting in Harare where a majority of the creditors voted in favour of the scheme of arrangement.
In an update on the results of the scheme meeting, the scheme chairperson Mr Andrew Lawson indicated that 71 creditors of the 80 that attended the meeting voted in favour of the scheme. Creditors opposed to the scheme of arrangement were eight while one abstained.
Had the creditors rejected the scheme of arrangement, HCCL management could have looked at other options such as judicial management.
In a statement, HCCL managing director Engineer Thomas Makore said:
“A substantial number of creditors attended the meeting and others through their proxies. The meeting was chaired by Mr A Lawson in the presence of legal advisors, financial advisors and scrutinisers. The Creditors resoundingly voted yes in support of the Scheme of Arrangement”.
Eng Makore said Hwange colliery was grateful and acknowledged the decision made as a watershed and turning point in the firm’s strategic plans.
“The scheme of arrangement documents were submitted to the High Court for sanction. Thereafter, it will be implementation of the scheme plan,” he said.
The HCCL boss stated that the scheme of arrangement affords the coal producer an operating space to implement business and turnaround plans.
“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 . . . 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 Eng Makore.
It is believed that the financial resources will be channelled towards production activities at opencast and underground mines as well as metallurgical operations so that production volumes increase to above break-even point.
Between 2015 and last year, the colliery was faced with a myriad of litigations and writs of executions as its revenue base shrunk from $67 million to $39 million. Workers had also taken the company to court demanding judicial management as an option citing a string of alleged mismanagement and corruption charges against the top executives. The company has been failing to pay workers for several months.
It is also hoped that the scheme of arrangement will go a long way in facilitating the turnaround strategy of the colliery, once Zimbabwe’s largest coal producer.
The firm has already indicated plans to convert current to long-term liabilities and seek short to medium and long-term working capital facilities from banks.
Last month, Eng Makore announced that his organisation had secured two 25-year coal supply agreements with the Zimbabwe Power Company and an independent power producer, Lusulu Power in Matabeleland North.
The agreements, which would see HCCL producing 400 million tonnes of coal per month, were part of the initiatives to support and sustain the colliery’s turnaround strategy.
In 2015, the Government granted HCCL three new concessions in Western Area, Lubimbi East and West following concerns that the colliery’s present concessions would run out within five years.
The new concessions, which are expected to prolong the lifespan of Hwange by 50-70 years, have an estimated resource of about 750 million tonnes of mainly coking coal and thermal coal.
HCCL targets to improve production volumes from 40 000 tonnes per month at present to 500 000 tonnes per month in the long-term.