Troubled chrome smelter, MonaChrome’s major shareholder Germany-based NK Trading last week sought to delay the company’s disposal to allow it to resubmit its bid while major creditor, AfrAsia which is owed $4 million wanted the matter finalised there and hen, the High Court heard.
MonaChrome, established five years ago, is a wholly owned subsidiary of NK Trading Africa One GMBH KG, a Germany-based company.
It ceased operations in 2012 due to high production costs and a government ban on chrome exports and was subsequently placed under provisional judicial management in September of the same year.
At the company’s last creditors meeting in May, the judicial manager, Christopher Maswi of Fairvalue Management Consultancy told creditors that two investors who had expressed interest in the company had failed to submit bank guarantees.
The company’s major shareholder, NK Trading and Borderless Trading Zimbabwe had won the bids to inject capital into the company but failed to meet the April 30 deadline to submit bank guarantees.
Borderless Trading last year made a $2.8 million bid for the company and had pledged to invest an additional $5 million working capital to get the business running while NK Trading submitted a business plan.
Maswi had recommended that the company be liquidated after failure to raise working capital to resuscitate it.
Creditors, however voted to extend the period further to August to allow for new bids but by the time of the creditors meeting on Wednesday, only one bid was received from Makomo’s subsidiary, Chempec worth $4.3 million.
A representative from NK Trading, Stephen Dhliwayo asked the court to defer the meeting to next year to allow NK Trading to resubmit its bid.
“NK Trading wants to put a better bid which needs to be circulated to creditors,” said Dhliwayo.
However, an AfrAsia representative, who declined to be named, objected saying the shareholder was using “delaying tactics” and that the bank could not wait any longer and needed the matter finalised immediately.
“NK Trading wants their cake and to eat it, let’s proceed with the meeting,” he said.
MonaChrome, whose assets are worth $16 million, owes creditors $17 million with Kingdom Bank (now AfrAsia Bank) being the only secured creditor owed $3.9 million. Other creditors include Zesa Kadoma which is owed $1.4 million; Stanbic Bank, $233 800; Zim Alloys $283 000 and employees $530 000.
If the creditors had voted, for the takeover by Chempec, AFrAsia stood to get $2.5 million, over half of what it is owed while unsecured creditors would share $1.5 million with $300 000 going towards statutory and other costs.
Another bidder, a United Kingdom-based firm, Gombe Holdings wanted to submit its bid by January 2015.
The judicial manager insisted that the disposal should not be delayed further.
“We have waited for this transaction for so long. NK came in late and we accommodated them but they failed to provide a bid in May and in August. They came up with wish wash bid,” he said, adding that allowing them more time was tantamount to “abuse of the system.”
Prospective buyers were given up to 31 December to submit their bids while the case will be finalised on January 14, 2015.
Zimbabwe has three smelters – Zimasco, Afrochine and Xin Yu – that are in operation while five others – Oliken, MonaChrome, Zimalloys, Maranatha and Wel Mine were closed due to low chrome prices.- The Source
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