Creditors calm Hwange nerves

Africa Moyo
PROBABLY the longest eight days in Hwange Colliery Company Limited (HCCL) managing director Engineer Thomas Makore’s management career ended in a morale-boosting triumph after the company’s creditors voted overwhelmingly in favour of a Scheme of Arrangement that allows the coal miner to worm its way out of a staggering US$352 million debt.

Eng Makore’s nerves appeared to be jangling when he addressed journalists during the 2017 Zimbabwe International Trade Fair in Bulawayo, announcing that a Scheme of Arrangement meeting had been held on April 26 in which creditors voted ‘yes’ or ‘no’ to the scheme.

The meeting was chaired by Mr Andy Lawson in the presence of Mawere Sibanda Lawyers (as legal advisors), CBZ as financial advisors, KPMG for scheme document integrity checking and Ernest & Young as scrutineers.

Last week, Eng Makore said creditors had “resoundingly voted ‘yes’ in support of the Scheme of Arrangement”, signalling a turning point in HCCL’s fortunes. “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 Eng Makore.

He has every reason to be excited because a ‘no’ vote would have brought HCCL’s 118-year history to a shuddering halt. The options were dire if creditors had rejected the scheme, with liquidation looming large.

Asked by The Sunday Mail Business during the ZITF press conference what would happen if creditors disapproved the scheme, Eng Makore said: “We look at our options” (but) “it’s not an outcome that we desire.”

“The options would be judicial management and we definitely want to avoid liquidation.” Now, Eng Makore can live to fight another day as the Scheme of Arrangement affords the company some operating space to implement its business and turnaround plans.

Crucially, the scheme keeps the company’s creditors at bay as assets are now protected. NHCCL was faced with a myriad of litigations and writs of executions which literally crippled its operations.

Eng Makore said as part of its strategy, HCCL plans to convert current to long-term liabilities and seek working capital facilities from banks. “The financial resources will be channelled to production activities at opencast, underground and metallurgical operations so that production volumes will increase to above break-even point.

“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,” he said.

Encouragingly, the scheme comes at a time HCCL has smoked the peace pipe with contractor, Mota Engil, which had downed tools over non-payment of almost US$41 million for coal supplied.