Chronicle EditorListed Hwange Colliery Company Limited (HCC) says it has stopped discussions for a rights issue and private placement on the need to prioritise a debt clearance strategy.Sources say the coal producer was considering a capital raising initiative involving a $25 million and a $100 million bond issue in the UK.
But those plans have been put on ice.
“Hwange Colliery Company Limited wishes to advise its shareholders and the public that after consultations with major stakeholders and professional advisers the company has found it prudent to pursue a debt management plan ahead of any capital raising initiatives,” said the company in a statement yesterday.
HCC is currently sitting on debts of around $310 million to various creditors, and was presently involved in discussions to implement a scheme of arrangement to reschedule the debt.
“As such the company has suspended discussions involving the rights issue and private placement and is at advanced stages of a Scheme of Arrangement with creditors.”
Hwange said in respect of the Scheme of Arrangement, “engagements” were in the final stages.
“The company is finalising engagements with its creditors for a mutually acceptable debt management plan,” it said.
The proposed Scheme of Arrangement will require the support of shareholders at an extraordinary general meeting before the end of the year.
To the extent that it is successfully implemented, the plan should ease pressure on the firm’s balance sheet, giving it scope to expand output from its Western Areas Concession, restart underground mining, and re-fire its coke ovens.
HCC’s financial performance in recent times have been far from excellent, but it narrowed its loss by 36 percent to $28 million in the six months to June 30, 2016 from $44 million in the prior comparable period. — BH24.
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