HARARE, April 26 (The Source) – Hwange Colliery says it is banking on the approval of its scheme of arrangement with its creditors to turnaround the struggling company.
The coal miner owes various creditors $180 million and its full year results released last month showed liabilities exceeding total assets by $168 million.
It wants creditors to agree to a structured payment plan to stop its equipment being auctioned off for failing to honor obligations. If successful, it would also allow the colliery to borrow money from banks for working capital.
The scheme of arrangement was put to vote among its creditors on Wednesday but the company said it would announce the results on May 4.
Hwange Managing director Thomas Makore said the proposed Scheme of Arrangement would allow for the implementation of a turnaround plan, which would include cost control measures and strict financial management.
“The Scheme of Arrangement is the anchor of our turnaround plan. It allows us the operating space to ramp up production and access capital from the banks ….and we have already received working capital from our shareholder in the form of treasury bills,” said Makore.
Government, which holds 37 percent shareholding in the listed miner, issued treasury bills of $41 million and $18,2 million in settlement of the MotaEngil debt and RBZ/PTA Bank loan, respectively.
“For production to be enabled we need the support of our creditors. We are ramping up production as we speak in terms of our own operations and the mining contractor (Mota-Engil). We are also in the process of resuscitating our underground operations were we get high value coke and coal,” said Makore.
Last week, the miner said it had signed two off-take deals with the Zimbabwe Power Company and independent power producer Lusulu Power for a combined 400,000 tonnes per month.
Hwange would need to attain the levels of operational efficiency the company last enjoyed in the early 1990s, when output peaked at 5.5 million tonnes.