Steelnet judicial head named

Steelnet Zimbabwe.
Steelnet, whose shares have been suspended from trading on the Zimbabwe Stock Exchange, opted for a voluntary judicial management to allow for injection of fresh capital through a US$3,4 million rights offer.

Mr Maswi said on Wednesday: “I have now been formally appointed . . . effectively we have started our work today.”
Mr Maswi could have started the provisional judicial management process a little earlier, but sources said he was struggling to secure a security bond.
His immediate task is to prepare a report on the state of affairs at the company, the reasons for viability problems and its rescue plan.

Steelnet’s total liabilities stood at US$4,6 million by the end of May this year.
The company, which manufactures steel pipes, fasteners and agriculture implements requires new capital to return to viability.
In 2010, the company injected only US$270 000 to capitalise the group.

On May 10, Steelnet published a note to shareholders that it was at an advanced stage of selling one of its subsidiaries and sources pointed out that it was Tube & Pipe, the producer of seam-welded steel pipes, mostly for the mining and manufacturing industries.
Last year, shareholders tried but failed to raise about US$6 million because the main shareholder could not follow their rights. In full-year results to December 31 2010, the company indicated that due to successive losses, its ability as a going concern was constrained.

Steelnet, which operates three business units, saw its working capital eroded during the hyperinflation period between 2007 and 2008. The liquidity crunch arising from the introduction of the multi-currency system also created a further burden.

The judicial management will enable a company suffering from temporary setbacks to turn around.
The judicial manager, who is supervised by the Master of the High Court in running the affairs of the company, replaces the management in the form of a board of directors.

When a company is placed under judicial management, it enjoys a moratorium of debts in that in terms of Section 130 subsection 3 of the Companies Act, all actions and proceedings and execution of all writs, summons and other processes against the company, will be suspended.

The breathing space given to the company by this moratorium allows for the formulation of a rescue package and guarantees the firm’s continued operations in the absence of the creditors.