RioZim has the potential to regain its former glory

potential investor.
It appears that investors have now woken up to the realisation of the huge potential that RioZim has and are willing to overlook shareholder squabbles and are keen on investing in the future of the company.
The firm’s value dropped to its lowest levels during the previous year from about US190c to as low at US25c.
Since the beginning of the year the share price has been on the rebound, currently trading at US60c, although it is still far off from its record levels.
Banks owed in excess of US$50 million by the mining firm are on a warpath to recover their dues and in the process they are seeking the ouster of managing director Josh Sachikonye.
It all started at the extraordinary general meeting held in December last year, at which 47 percent of the shareholders dismissed the debt to equity deal proposal tabled by the company.
Banks rejected the terms of the swap deal well before the company published the notice of the resolutions of the proposed transaction.
Having turned down the offer, banks opposed to the deal opted to apply for the company to be placed under judicial management after throwing out liquidation.
The market is divided over the goings-on at RioZim. Some are of the idea that top management should go, mainly Sachikonye, but some are still not sure if this is the way to solve problems at the giant mining company.
All said and done the bottom line remains that the company has to be recapitalised and debts have to be paid.
It also remains to be seen where the money will come from.
Internal resources genuinely are not enough to cover this huge date. However, the fact still remains that RioZim is a mining giant that has huge potential to achieve profitability from its gold and diamond and coal mining activities.
There is no doubt the company has a huge upside potential and long-term investors still have a chance to come in and invest in the resources firm.
A number of investors have been fingered from the time RioZim started looking for a strategic partner to invest in the company.
It started with Essar Global, who turned down the deal and up until now the company is still struggling to secure a serious investor.
Shareholders do not seem ready to dig deep into their pockets to fund operations of the company before the current issue is addressed and probably before someone is send packing.
Soon after the December indaba, the company is said to have initiated consultations with shareholders to find a way forward, which will solve its short-term financial woes and set the roadmap for long-term investment.
Still at this point it was not clear what RioZim was planning to do and what option shareholders had in mind apart from liquidation and judicial management.
Thereafter, late last month the company issued another cautionary statement to shareholders when dealing with company shares. This indicated that some talks were being held with potential investors.
Early this month, another cautionary was issued to the effect that the company had accepted an offer, with the support of major shareholders to provide sufficient funds to solve the company’s indebtedness and provide a way forward.
The board went on to say that they were aware of the intention by some banks to apply for the company to be placed under judicial management.
According to the cautionary statement, both the company and its major shareholders opposed the bid.
At this time the transaction was linked to a local investment firm, Rain Tree, which was also quoting international equity fund, Global Emerging Markets.
Over the weekend RioZim issued another statement to shareholders that a deal was sealed with the investor to recapitalise the company and that key stakeholders had made significant progress on ensuring acceptance of the proposal.
RioZim is yet to publicly unveil the name of the investor who is likely to get a controlling stake in the company through a private placement of US$35 million.
The company wants to raise US$47 million through a combination of a private placement and a rights offer.
One issue that comes up is that is this the final time we are seeing investors getting serious about investing in RioZim?
Indeed, recapitalisation of the mining giant is long over due.
A lot of issues have been bandied about at the company and it’s high time investors get serious and make an investment.
If this deal goes through days of glory might be beckoning at the once vibrant mining company.