HomeBusiness DigestRioZim, creditor banks rift widens

RioZim, creditor banks rift widens

Sources said RioZim MD Josh Sachikonye is buying time with half-baked proposals and shifting of positions.

It is understood this week he surprisingly changed details of earlier agreed positions which are of material effect to the whole deal.

RioZim and the banks had agreed on a structure where the resources group would bring an investor to provide US$10 million to retire part of the debt, with the balance being guaranteed by a Triple A (AAA) –– rated foreign bank yet to be identified.

Sachikonye is believed to have this week made a u-turn on some sections of earlier agreed positions and was quoted in the media confirming that the company had secured a partner and intended to raise US$47 million through a private placement and a rights offer.

However, sources said the company has not yet concluded a concrete deal with any investor which has been presented in writing to the banks.
RioZim management is said to have demanded that the banks suspend their application for judicial management to make the would-be investor comfortable with the ongoing discussions.

“We have only been told of ongoing negotiations with a potential investor which have not yet been concluded and as banks we cannot use that information as basis for evaluating our position,” said a banker.

When reached for comment on Wednesday Sachikonye said: “There is a firm offer that we communicated through a press statement. It is up to banks to choose to ignore it.”

Last week, RioZim published a cautionary statement accusing banks of ignoring a deal on offer which the company was still negotiating.

But the consortium of banks is understood to have been outraged by RioZim’s move to publish the statement since it was inaccurate insofar as the deal on offer was concerned and was not conclusive, yet it formed part of the company’s negotiating strategy.

It is also understood that RioZim published the statement in violation of the banks’ position not to do so, amid indications banks felt the motive to publish the notice were purely to frustrate the judicial management process.

The consortium of banks is believed to be still pushing for judicial management as they intend to recover depositors’ funds they advanced to the mining giant.

“We are running our own process, pursuing judicial management and if RioZim manages to conclude their negotiations then we will consider their proposal,” a source said.

The banks also accused RioZim management of using the many offers the company is currently receiving from interested investors to frustrate the judicial management process.

“The offer was made coincidentally with the application of judicial management and the motive raises eyebrows, given that the company has had many offers on the table for the past three years,” said a source.

Given the duration of negotiations between the banks and the troubled mining giant, which have not yielded a solution to the deadlock, the banks feel that the call to suspend the application at the High Court can easily be used to buy time.

RioZim Ltd has 10 working days to respond to the banks’ application for judicial management from the date of receipt of application at the High Court and could probably be under immense pressure to salvage the situation.

Creditor banks revealed that the move to place the company under judicial management was motivated by the need to resuscitate it, a development which will be beneficial to all stakeholders, including creditors and employees and should not be necessarily viewed as the end for RioZim.

“We do not view judicial management as death of RioZim but as an opportunity to resuscitate the company, given its huge resource base. But management seems to see it otherwise as they want to protect their interests,” said a banker.

If judicial management is granted, RioZim’s management faces the boot.

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