Business Reporter
RioZim minority shareholder Mr Tendai Rwodzi has applied to the High Court to stop the company’s extraordinary general meeting (EGM) seeking to approve the sale of Renco Gold Mine for US$35 million to repay loans, service creditors and stabilise operations at Cam & Motor gold mine.
In the court papers, Mr Rwodzi argues that the proposed sale violates the law because RioZim is undergoing corporate rescue proceedings. Once an application for corporate rescue is lodged, a company is legally deemed to be under corporate rescue to protect its assets from being stripped.
The application for corporate rescue was filed in April this year, seeking court protection and preventing the disposal of key assets while a strategy is developed to restore stability and pay off creditors.
RioZim, listed on the Zimbabwe Stock Exchange, issued a notice in late September seeking shareholder approval for the transaction.
The sole item of special business is to approve the disposal of Renco Mine as a cash-generating unit and going concern to an unrelated third-party purchaser.
The proposed transaction encompasses the transfer of the Renco mining lease, special grant, associated mining claims, land and buildings, plant, machinery, equipment and operational infrastructure.
In addition, the purchaser will assume specified liabilities valued at approximately US$1,697 million.
According to the board, the disposal is a vital step in the company’s broader balance sheet restructuring strategy to reduce an outstanding debt burden driven by a net current liability position of about US$51 million.
