Source: Hwange, creditors agree on payment plans | The Herald May 8, 2017
Martin Kadzere Senior Business Reporter
HWANGE Colliery Company Limited is seeking to raise up to $15 million to fund its short term capital needs after its creditors agreed to enter into structured payment plans with the coal miner, managing director Mr Thomas Makore said.
Hwange Colliery held a creditors’ scheme of arrangement meeting last week where 88 percent of the creditors voted in support of the scheme while 10 percent voted against. About 80 percent of the creditors attended the meeting and others through proxies. “We will immediately look for three months working capital cover and that will be around $5 million per month. We are already talking to some local banks,” said Mr Makore.
“Hwange is grateful and acknowledges this decision as a watershed and turning point for our strategic plans. Hwange, which owes creditors about $352 million was faced with a plethora of litigations and writs of executions, which crippled its operations. The company’s assets are now protected through the Scheme of Arrangement.
“The Scheme of Arrangement affords the company the operating space to implement its business and turnaround plans,” said Mr Makore.
Apart from seeking working capital facilities from local banks, Hwange will convert current to long term liabilities. The financial resources will be channelled to production at opencast, underground and metallurgical operations to increase production volumes to above break-even point. Adequate supply of coal to the national electricity utility will remain a priority while supply of profitable coal grades and coke to industry and export markets will ensure that the company operates profitably and meets its obligations in terms of the scheme.
Hwange is planning to increase output in the open pit operations. The company is working on making its mining equipment more reliable to achieve production of 100 000 tonnes a month by the second half of the year. In addition, resuscitation of underground mining will contribute high value coking coal to the production mix, the company said recently.
This will enable it to increase coking coal from underground operations and industrial coal for export to Zambia, and later on to South Africa and the DR Congo. Recently, Hwange signed off-take agreements with two thermal power stations, which will see the company supplying the firms with about 400 000 tonnes of coal per month.
The 25–year coal supply deals will see Hwange supplying more than 200 000 tonnes of coal per month to each of companies it signed the off take agreements with namely the Zimbabwe Power Company and Lisulu Power, an independent power producer in the Matabeleland North Province.
The deals are expected to underpin Hwange’s turnaround programme. Going ahead, Mr Makore said the company would soon engage regional and international financiers to raise capital for major projects.