Cash-strapped BNC scraps pay for idle staff

September ran out.
BNC has tried in vain so far to secure restart funding through a US$21 million rights issue.
But this requires satisfactory resolution of staff and creditor liabilities before it can proceed. The rights issue was scheduled to be completed on July 27.
However, BNC had not received sufficient agreement from staff in time and the rights issue had to be extended to August 10 to give staff more time to respond to the company’s offer.
It is this delay in the rights issue which has caused the cash to run out at BNC.
The company’s shareholders approved all resolutions required to implement the envisaged transaction which were put to the vote at an Extraordinary General Meeting held in Harare last month.
The transaction involves a rights issue for US$21 million whereby all shareholders are given the opportunity to invest in BNC.
BNC chief operating officer Mr Batirai Manhando said yesterday the decision to freeze salaries was precipitated by cash squeeze.
“The only way the rights issue can be concluded is for staff and creditors to accept the packages offered,” he said.
He added that the response from trade creditors was  positive and encouraging, and, while discussions were still underway with power utility Zesa Holdings and the Zimbabwe Revenue Authority, he was confident that a workable solution could be reached.
In the event of liquidation, he said staff and creditors stood to receive much less than they were being offered in the settlement packages.
“Liquidation would mean everyone loses,” said Mr Manhando.“While it is understandable that creditors and staff are disappointed not to be receiving their payouts completely in cash, the reality is that the company does not have sufficient funds to pay everything in cash and also fund the restart,” he said.
“The offers made to staff and creditors include a mix of cash, shares and assets, which, at least, ensures that these stakeholders receive something while ensuring that the first phase of the BNC restart is viable.”
Mr Manhando said although the company had                 been forced to suspend salaries to staff members not involved in the care and maintenance programme, critical services, such as water and electricity supply to the mine villages, mine clinics and school buses would remain.
But, he said, this was only viable for a few weeks more after which even these services would cease if the rights issue did not proceed.
“This should not come as a surprise to staff,” he said. “BNC management has for some time now communicated the critical situation it is in and the requirement that the rights issue should have proceeded on 27 July.
“BNC’s offer to staff is in good faith and we believe the best possible offer the company could present in the circumstances.”