GEM’s initial 2012 investment saved RioZim, one of Zimbabwe’s biggest mining firms, from imminent collapse under the burden of debt. GEM has dominated subsequent capital-raising initiatives by the miner, as hard-up local shareholders struggled to follow their rights.
RioZim early this year successfully completed a debt restructuring exercise early this year in which Zimbabwe Asset Management Corporation (Private) Limited ‘Zamco’, a division of the RBZ acquired some of its short-term debt of nearly $34 million and lowered finance costs by half, creating fiscal space for the resources group.
In the three years to June last year, RioZim had paid $36.3 million in interest charges but only reduced its core debt from $58 million to $43.1 million.
The Zamco deal saw interest rates charges on the debt, which averaged over 21 percent, come down to nine percent.
Zamco was set up by government to purchase non-performing loans from banks and clean their balance sheets. Apart from RioZim, it has said it intends to purchase bad debts of Cottco Holdings, Hwange Colliery, Cairns Foods, Border Timbers, Astro Motors and the Cold Storage Company.- The Source
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