The government has finally applied for a court order to place Hwange Colliery Company Limited (HCCL) under administration, almost a month after announcing that the giant miner had been put under reconstruction.
BY VENERANDA LANGA
Attorney-General Prince Machaya lodged the papers at the Harare High Court last Thursday after a barrage of criticism for allegedly bungling the process.
The application was filed under case number HC 10766 and it seeks an order in terms of section 8 of the Reconstruction of State-Indebted Insolvent Companies Act (chapter 24:27).
If successful, the court case will confirm the reconstruction order issued by Justice minister Ziyambi Ziyambi.
Last week Machaya appeared before the Temba Mliswa-led parliamentary mines portfolio committee where MPs grilled him for rushing to place HCCL under administration without consulting other shareholders.
Bekithemba Moyo was appointed as the administrator and given powers to raise money without authority from HCCL shareholders.
In the High Court application, Ziyambi said the coal miner was put under reconstruction because it had become apparent that it was no longer in a position to repay the $220 million it owed creditors.
“At the time that I issued the reconstruction order in relation to Hwange, it appeared to me that: Hwange was ‘state-indebted’ in that it was as at October 29, 2018 indebted to the state and statutory corporations and state-owned companies, by reason of having received credit in its favour, disbursed or payable out of public funds in excess of $220 million,” he said.
“Hwange was unlikely to be able to make any repayment of the credits or loans made to it from public funds on a date when the repayment of such funds was due.”
The minister blamed what he termed gross mismanagement at the colliery for the dire financial position.
“Hwange was, through such mismanagement, being prevented from becoming a successful concern,” Ziyambi said.
“There was a reasonable probability that if the company was placed under reconstruction, it would be enabled to pay its debts and meet its obligations and become a successful concern; and it would be just and equitable that Hwange be placed under reconstruction.”
He justified the government’s failure to follow procedures, saying immediate action was needed to protect the company, its creditors, members and employees.
“In this regard, I proceeded to place the company under reconstruction without affording the company an opportunity to make representations in this regard,” he said.
HCCL chairperson of the scheme of arrangement Andrew Lawson told the mines committee that it was illegal for Ziyambi, Machaya and Mines minister Winston Chitando to place the company under reconstruction without informing shareholders.