By Chipo Musoko, HARARE, February 26 (The Source) – Former Apex Corporation subsidiary Precision Grinders Engineers was overvalued when it was disposed for $200,000 in a management buy-out two years ago, the High Court heard on Wednesday.
Precision Grinders, once a major manufacturer of agricultural equipment and machinery, is now battling to return to profitability after being placed under judicial management last November.
It also inherited liabilities worth $375,000 of former stock-exchange listed Phoenix Consolidated Industries, which is also under judicial management after being incorporated into the firm.
Over the years Precision has struggled to service its debts while recording losses, $500,000 in 2012 and a narrower $42,000 last year.
“If the company is liquidated, its obsolete plant and equipment will at most realise $50,000 which should have been the purchase price of the company,” judicial manager, Winsely Militala told creditors.
He said a total clean-up of the balance sheet would only be possible after the liquidation of Apex Corporation and that efforts to renegotiate the selling price had not been successful.
“The Phoenix judicial manager turned down attempts to negotiate the original purchase price but further attempts will be made,” he said.
Precision Grinders, which has four divisions – agriculture equipment, mining equipment, steel structures and general engineering – is currently at 30 percent capacity utilisation.
“We have managed to make a profit,” Militala said adding that the company was now holding a bank balance of $3,600.
“The company should be given an opportunity. There is a window that the company can trade itself out of insolvency,” he said.
He said the company’s management had sent out quotations worth over $2 million and anticipated to get orders whose income would be used to pay creditors.
The firm anticipates generating business from the current tobacco selling season although its mining business remains subdued due to poor performance of the sector.
Militala said relations with mines had been revived to supply car axles and refurbishments.
Precision used to be a major supplier of mining equipment to Metallon Group, Golden Valley, ZMDC mines and Anglo American mines.