Banks block Border Timbers bid for final administration, new creditors claim $21mln

Banks block Border Timbers bid for final administration, new creditors claim $21mln

By Chipo Musoko, HARARE, April 15 (The Source) – Three banks that are owed a total of $6,3 million by struggling Border Timbers Limited (BTL) on Wednesday blocked a bid to place the firm under final judicial management saying they need time consider existing options before making a decision.

Border Timbers, which is listed on the Zimbabwe Stock Exchange was placed under provisional judicial management on 21 January this year after failing to services its debts from financial institutions worth $20 million.

Its assets are worth $155,8 million while liabilities total $57 million, making it technically solvent.

Placing a company under final judicial management is an indefinite decision which may delay the process of liquidation should creditors decide to sell its assets to recover what is owed.

Unity Sakhe of Kantor and Immerman representing FBC Bank which is owed $4,9 million; NMB Bank $1,1 million and Ecobank Zimbabwe $503,000 said his clients were engaged in negotiations with the company regarding restructuring of its debts and needed time to also consider available options.

“They (the banks) are of the view that it (Border Timbers) can survive but would like to consider options before final judicial management. They want to have certainty that negotiations will go well and get information on what the final judicial management would look like,” Sakhe told creditors during a meeting at the High Court on Wednesday.

“There is some hesitation on final judicial management without knowing what will happen.”

Sakhe also asked that the return date be moved from April 29 to July 1  to allow the creditors to consider restructuring of the debt and other options.

“If the company goes into final judicial management its indefinite. They want information so that they can sit and formulate a way to restructure the debt. If it was up to the banks they would want their money,” he said, responding to a question from one creditor who asked whether it was guaranteed that banks would reach an agreement on debt restructuring.

Sakhe said the banks would also consider refinancing the business should it be an option.

Provisional judicial manager Peter Bailey said there was need to save the company to preserve value.

“Much value will be lost on liquidation. It (Border Timbers) has potential to come out of this. It is somewhat over borrowed but can trade out of it. I recommend final judicial management or for creditors to arrange some kind of compromise,” he said.

During the meeting creditors presented claims worth $20 million and the meeting was deferred to allow creditors in Mutare to make submissions before the return date is determined.

Some of the creditors who presented claims during the meeting include MBCA Bank which is owed $1,9 million; TelOne $161,700 and National Tyre Services $46,500.