Source: Govt to clear Hwange Colliery debts | The Herald September 28, 2016
Tinashe Makichi: Business Reporter
Government expects to clear a significant portion of Hwange Colliery Company’s debts by early next month to pave way for the implementation of new strategies aimed at reviving the company. The coal miner has been negotiating a number of debt clearance instruments and creditor payment plans aimed at cleaning its balance sheet. Hwange Colliery’s debt is estimated to be around $300 million.Mines and Mining Development Minister Walter Chidhakwa on Monday said Government has been scouting for potential strategies aimed at reviving the country’s largest coal miner.
Strategies being mooted by Government include selling part of the company’s houses to employees to offset salary arrears currently sitting at $59 million while $69 million worth of debt will be converted to equity.
“Out of the 5 000 houses at Hwange Colliery we sold off 1 000 houses to sitting tenants. The sold houses are expected to deal with the $59 million owed to the employees as salary arrears and we hope that a significant amount of this debt will be taken away.
“Government has also taken $69,1 million which is to be converted into equity or a longer financing facility which will then cleanse the balance sheet of Hwange,” said Minister Chidhakwa.
Government is looking at shedding off some of Hwange Colliery’s non-core operations, including rationalisation of its workforce from the current 3 200 to levels that are commensurate with production.
The Colliery Company is also on the verge of striking coking coal supply agreements with South African firms. Minister Chidhakwa said the original plan for Hwange Colliery was to produce coking coal and not thermal coal, a situation which has seen the company fail to perform within expectations.
“We are in the process of sorting out a scheme of arrangement with other creditors and I know by October 10 we would have cleaned the balance sheet of Hwange and that will enable us to move forward with our signed agreements,” he said.
The minister said Government is in the process of trying to switch back to the original model of producing coking coal and a market is being made ready in South Africa.
Minister Chidhakwa added that the motive behind those strategies was to make sure the company bounces back to profitability for the benefit of the economy in general.
“Coal production has gone down significantly at Hwange Colliery and as Government we have been looking at why Hwange Colliery came down from making a profit of $14 million a year and now making huge losses.
“We have contracted people who told us that the original model for Hwange was based on producing coking coal and not thermal coal. This meant that to produce coking coal you need a market because the prices of coking coal are much higher and returns are much bigger than those of thermal coal,” said Minister Chidhakwa.
COMMENTS
Bond notes?
Fact is, that swap of debt for equity means the citizens of Zim who are owed the debt become shareholders responsible for all the remaining debt. And, whacha wanna bet a lot of real money magically disappears when the smoke from that little accounting gadget clears. It’s a legitimate accounting move, but pure hokus pokus in the hands of zanupf.
This is what ya get from a communist-inspired government where only the government bigwigs win.
clear with what when its so broke?
Hwange Colliery Company – another example of when ZANU PF gets involved in what should be a private sector company. It produced 600 thousand tonnes of coal in 6 months ( = to 1.2 mn tonnes p a) – when Anglo American ran the colliery it produced 5 million tonnes per annum – paid taxes and paid shareholders a dividend.
Todays company HCCL or Hwange Colliery Company Ltd is classic case of dead man walking – much like ZANUPF and its leader !