Zimasco seeks six-year relief on debt interest

Zimbabwe’s largest ferrochrome producer, Zimasco, currently under provisional judicial management, has approached banks it owes $35 million for a six and half year moratorium on interest on the pre-judicial management debts.

Zimasco, majority owned by China’s Sinosteel, applied for judicial management to protect its assets from creditors who wanted to attach the company’s properties and was placed under provisional judicial management by the High Court of Zimbabwe on June 3 2016.

The company owes creditors a total $181 353 847 million against its total asset base of $185 164 022 million.

According to the company’s provisional judicial management report, provisional judicial manager Reggie Saruchera says the company is able to return to viability in the next 6 years if it is protected from creditors while implementing the turnaround plan.

“We are negotiating settlement terms with creditors in order to facilitate the re-construction and re-organisation of the company. To this end, within the re-structuring plan we are negotiating a moratorium on interest on the pre-judicial management debts,” he said.

Saruchera added that if the banks do not support this arrangement, the company will engage the Reserve Bank of Zimbabwe (RBZ) debt assumption vehicle the Zimbabwe Asset Management Company (Zamco).

The proposal is not likely to be smooth-sailing, as banks accuse Zimasco of not being honest and upfront about its plans to be placed under administration.

According to the report, of the five banks owed, BancABC is the largest creditor at $11.960 million, followed by Nedbank at $10 198 million.

Security placed on the BancABC facility includes a negative pledge on assets and unlimited guarantees by Zimasco Holdings and Shangani Exploration and a $15 million Notarial Special General Covering Bond over a portion of the slag dump.

Nedbank has a security the Pledge and Cession Agreement on stock held at Maputo and $10 million Notarial Special Covering Bond over a portion of the slag dump.

CABS is owed $8. 098 million and has a $10 mln guarantee from Shangani and Zimasco Holdings and the $10 million Notarial Special Covering Bond over a portion of the slag dump.

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