Sources close to the negotiations indicated that the Riozim would pay up to 40% of the principal amounts it owed the banks, with the balance 60% of the capital amounts plus interest being amortised over nine months.
With the announcement that Riozim’s long-serving MD Josh Sachikonye would finally step down, the news brought renewed hopes to the company’s creditors, who have been pushing for judicial management, which had it been granted, would have replaced the company’s management.
It is understood that RioZim will deal with the banks on an individual basis by first targeting to pay off the small consortium which has been pushing for judicial management.
However, there are concerns on how the money would be distributed, given that the consortium is owed around US$30 million, whilst the new investors will only immediately avail a total of US$10 million through a private placement and debenture.
RioZim is expected to have made the first payment by March 31 2012. Some of the banks in the consortium have indicated that they have not yet suspended the idea of judicial management for the company but are now less aggressive as they wait to see if the new investors will honour their proposals.
A source revealed that banks would review their position on judicial management if RioZim failed to pay the first instalment due this week.
Last week shareholders in the company passed all resolutions tabled at the extraordinary general meeting to recapitalise the mining giant. The company is going to raise US$56,7 million through the proposed composite transaction.
The existing majority shareholders sought minimal dilution and opted for the structure since the convertible debenture provides an opportunity for the company to pay off the loan on the back of the mining giant’s returning to profitability.
Sachikonye is understood to be exiting on a US$400 000 per annum package for the next three years.
Effectively, he will get US$1,2 million as a golden hand shake.
RioZim, which was once a vibrant blue chip counter, saw its share price plummet from a peak of US$4,20 post dollarisation to current trading levels of US$0,51, representing an 88% loss in capital.
When contacted for comment, Sachikonye refuted the claim, saying that he was stepping down without a package since his reputation took a knock through media reports.
“I don’t have a package, l am leaving as a poor man after you massacred my character in the media,” said Sachikonye.
The mining giant has been facing serious viability challenges threatening its going concern status due to significant cashflow constraints precipitated by a huge short term debt.
Underwriters of the transaction, GEM Raintree Investments, represent the interests of Global Emerging Markets (GEM), a US$3,4 billion investment group based in Mauritius and Raintree Mining, an indigenous Zimbabwean mining company focusing on exploration, resource establishment and verification.