Creditors of chrome smelter, MonaChrome today finally voted in favour of the company’s takeover by current German shareholder, NK Trading at the High Court while two banks, AfrAsia and Stanbic bickered over its disposal.
MonaChrome ceased operations in 2012 due to high production costs and a government ban on chrome exports. It was subsequently placed under provisional judicial management in September of the same year.
The company’s liabilities total $17.3 million while its assets are worth $16.6 million.
During a meeting at the High Court in May last year, creditors requested for an extension to the two bidders, Borderless Trading Zimbabwe and NK Trading Africa One GmbH & Co. KG that had failed to meet the April 30 deadline to submit bank guarantees while opening it to new bids.
Two companies, NK Trading and Chempec, a special purpose vehicle owned by the country’s biggest private coal miner, Makomo submitted bids which were considered during the High Court meeting today.
Some creditors expressed reservations over the two bids citing lack of bank guarantees but were eventually persuaded to consider the offers as it had taken years to find investors.
Among others, Chempec offered to buy the company for $4.3 million of which $2.5 million would be paid to AfrAsia Bank; $1.5 million to unsecured creditors and $300 000 would go towards statutory costs.
It also proposed to pay an initial deposit of $2 million and for the balance to be paid in instalments. NK Trading offered $4.5 million of which $1.5 million would be paid to AfrAsia and $2.7 million to unsecured creditors.
After a protracted debate over the issue, 15 creditors voted in favour of NK Trading takeover while seven, including AfrAsia Bank which is owed close to $4 million, voted for Chempec.
Stanbic Bank, which is owed $233 000 abstained with its lawyers requesting for more time to consider the bids.
Master of the High Court, Eldard Mutasa said the decision on which company had won would be announced next Friday once all the votes had been analysed although he announced vote result during the meeting.
“The forms will be carefully examined and you will be notified of the outcome by the judicial manager (Christopher Maswi). Within a week, we should be done with the process,” he said.
Earlier on some lawyers representing other creditors wanted to block the Chempec bid, which would be guaranteed by AfrAsia Bank citing conflict of interest because the bank was also a creditor.
However, Chempec representative, Edmore Jori said there was no conflict of interest as the bank guarantee was a separate transaction.
“There is no legal conflict of interest, it’s purely a financing arrangement,” he said, adding that the company already has existing relations with the bank.
Claudious Nhemwa of Nhemwa and Associates representing the judicial manager pleaded with creditors to decide on the existing offers.
“Zimbabwe as an economy is not able to attract investors and with the current political environment this is the reality,” he said, adding that demand for bank guarantees would only stall progress.
Zimbabwe has three smelters that are in operation – Zimasco, Afrochine and Xin Yu – while five others – Oliken, MonaChrome, ZimAlloys, Maranatha and Wel Mine were closed due to low chrome prices.
MonaChrome, established five years ago, is a wholly owned subsidiary of NK Trading Africa One GMBH KG, a Germany-based company.- The Source