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BANKS owed more than US$50 million by RioZim Ltd have hired lawyers to place the mining group under judicial management, businessdigest has established.
Sources close to the developments said a consortium of banks — Trust, Tetrad, Metropolitan, Interfin and BancAbc — have engaged lawyers to pressure RioZim management into action.
RioZim, according to an industry source, has been throwing various options at banks, including issuance of a three-year IOU paper and engaging a possible investor. But banks want formal offers, the source said.
“The lawyers representing a consortium of banks owed by RioZim have instructions to start proceedings that will see the company being placed under judicial management. By Friday (today) the lawyers would have filed,” a source said.
This comes after RioZim Ltd’s shareholders last year rejected all the proposed resolutions of an extra general meeting which, among other things, dealt with the conversion of debt-to-equity.
The banks rejected the offer after it became apparent that the deal to convert debt-to-equity was skewed in the company’s favour.
Creditor banks last year hinted they would consider applying for Riozim to be placed under judicial management after losing confidence in the mining company’s management. They are now pushing for the judicial management option to go ahead.RioZim has been struggling to service its debts with local banks, a development that has forced them to continually roll the debt over.
The company’s finance charges are eating into the group’s bottom line, resulting in recurrent losses.
RioZim MD Josh Sachikonye would not be drawn to comment, insisting his company would issue a statement on Thursday.
— Staff Writer.
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