HARARE — Coal miner, Hwange Colliery Company Limited (HCCL), is seeking $33 million to recapitalise the business and double output to 300 000 tonnes per month, as it proposes to convert a $65 million debt in unpaid statutory obligations into government equity, an official said on Monday.
The debt is in relation to tax payments to the Zimbabwe Revenue Authority and pension contributions to the National Social Security Authority.
The recapitalisation programme will include a loan from PTA Bank and vendor financing of equipment from BML in India worth $15 million and BelAZ of Belarus worth $18,3 million. The equipment is expected in the country by August.
“We are finalising those agreements as we speak and in the month of July we expect them to be closed and delivery of equipment is planned for August or September,” the company’s new managing director Thomas Makore told journalists after the company’s annual general meeting where the media was barred.
The new equipment, some of which arrived from China last October, is expected to boost the Hwange output.
Makore said the company, which is technically insolvent, had embarked on a balance sheet restructuring as it was battling high interest charges and had in the past 24 months paid over $35 million to retire the legacy debt and reduce interest charges.
He said the working capital required would finance electricity, fuel, oils, lubricants, explosives, and spares. Provision would also be made to replace equipment and pay salaries of staff who are owed $19 million for the past 11 months.
“One of major initiatives of this balance sheet restructuring to address the legacy debt is the conversion of government debt to equity and we anticipate reaching agreement in the short-term,” he said.
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The company is also battling to pay creditors including Sany of China who are owed over $13 million with some of them having taken the company to court.
Makore said the board had resolved to split the company into divisions for better management of costs and performance and will result in HCCL restructuring.
“So instead of running it as one profit and loss statement we will run it per division.
“That way we can be able to monitor and track the costs per division and monitor the performance,” he said.
Long-term plans, he said include the coke oven gas supply to the Hwange Power Station, continued supply of coke oven by-products to Zimcam plant in Redcliff.
HCCL is working on a project with Zimbabwe Power Company to generate power though coal bed methane. The company has also applied to government for more coal mining concessions is awaiting approval.
Meanwhile shareholders did not approve directors’ fees for December 2012 and the share option scheme for employees of 2007, citing that the share price at the time of payment was extremely low and favourable to employees.
— The Source
