Hwange board to be dissolved

Hwange board to be dissolved
Published: 06 June 2014
Government has given notice that it will move a motion to remove all board members of Hwange Colliery Company Limited at the annual general meeting in June.

Secretary for Mines and Mining Development Professor Francis Gudyanga revealed the plans in a letter to the company dated June 2 2014.

"Please take note that shareholders are giving notice of moving a motion to retire all directors on the next members meeting, which will be held on June 30, 2014. Any other further details will be given in due course," he said.

The letter did not elaborate on the reasons behind the plans by Government, a majority shareholder with 37,1 stake in the coal miner, to remove the directors.

In response Hwange board chairman Mr Farai Mutamangira, in a letter dated June 3, 2014, said he would not seek re-election at the June meeting.

"I will be resigning at the next annual general meeting and I will not offer myself for re-election, pursuant to correspondence in this connection, through the office of company secretary," Mr Mutamangira said.

Although, the company had evidently been struggling due to the lack of capital, it had made inroads into securing affordable finance to recapitalise operations.

Hwange recently rejected an offer for a five-year convertible irredeemable loan stock in the sum of $50 million from another major shareholder Mr Nick van Hoogstraten, at an estimated cost of $9 million made up of interest at 10 percent, plus 3 percent of turnover and 17 percent of profit per annum. It was deemed the loan would be burdensome for the company.

This came as the board was also preparing to implement its turnaround plan. The colliery board and management had put together an "aggressive and definitive plan" to turnaround the fortunes of the company.

The turnaround plan was set to be presented to major shareholders and sought to address concerns on non-commercial activities in the company.

This included restructuring of executive management by resizing senior posts and bringing on board a chief operating officer  to strengthen management. The board also planned to cut Hwange’s head count by 50 percent.

According to the turnaround plan, Hwange was to be restructured into six operating divisions namely Hwange Colliery Holdings, Hwange Coal Mining, Hwange Plant and Equipment, Hwange Coal Processing and Cokeworks, Hwange Properties and Estates as well as Hwange Hospital.

The objective was to ensure that the divisions were profitable as individual business units and that they raised capital on the basis of their balance sheets.

Balance sheet restructuring was also on cards to convert $100 million of short-term debt to long-term debt to enable Hwange to meet its obligations.

The giant coal miner projected production to increase to between 450 000 and 500 000 tonnes per month, boosted by additional contracted capacity.

Hwange awarded Mota-Engil of Portugal a contract to mine and the company was expected to commence operations in the second half of this year.

The contractor was expected to produce 200 000 tonnes of coal per month. This would assure HCCL of a monthly turnover of not less than $18 million.

At this level, and assuming costs were contained below $9 million a month, Hwange would have sufficient turnover and gross margin to not only grow the business, but also to service its legacy debts, said the chairman.

The firm required as much as $150 million to fully recapitalise. Strides had been made to this end despite the liquidity crisis rocking Zimbabwe.
- The Herald
Tags: Hwange,

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