Bindura Nickel Corporation (BNC) faces possible liquidation if its employees do not accept a settlement plan involving cash and shares to settle back-pay liabilities and retrenchment packages, COO Batirai Manhando said.
Manhando told businessdigest this week that in the event of liquidation, employees stood to lose if they did not accept the company’s offer. The offer made to employees includes a mix of cash, shares and an asset which ensures they receive something whilst ensuring the first phase of the BNC restart is viable.
“Liquidation would mean everyone loses. Whilst it is understandable that staff are disappointed not to be receiving their payouts completely in cash, the reality is the company does not have sufficient funds to pay everyone in cash and fund the restart. BNC’s offer to staff is in good faith and we believe (it is) the best possible offer the company could present under the circumstances,” Manhando pointed out.
BNC this week extended its rights issue to end of August after it failed to receive sufficient acceptance of the retrenchment and back-pay settlement it offered to workers.
BNC has been trying to secure funding to restart its Trojan Nickel Mine Corporation through a US$21million rights issue, which commenced on June 7.
The rights offer, which was originally scheduled to close on July 27, requires resolution of staff and creditor liabilities before it can proceed.
However, BNC had not received sufficient agreement from employees in time and the rights issue has now been extended to August 31 to give workers more time to respond to the company’s offer.
Manhando said the group had run out of cash and would be forced to suspend all activities that are not essential to keep its mines dewatered by August.
“The delay in the rights issue has caused the cash to run out. This delay impacts more than just the timing of the restart. Had the rights issue proceeded as planned on July 27, we would be okay,” said Manhando.
BNC struggled to pay staff salaries at the end of July when it became clear that the rights issue was going to be delayed.
“In August there is no question, we do not have the money to pay salaries,” said Manhando.
The company’s shareholders approved all resolutions required to implement the envisaged transaction which were put to the vote at an extraordinary general meeting held in Harare late June.
The transaction involves a rights issue to raise US$21 million. Manhando said the response from creditors had been very positive.
“The only outstanding issue at this stage is now with staff. Unfortunately, the cash situation at BNC is such that we face a real threat of liquidation,” he said.
“We have extended the rights issue because we have had such good support from many stakeholders and are so close to a resolution that we believe the chance of success is good. The only way the rights issue can be concluded is by staff to accepting the packages offered,” Manhando said.