ZSE ordered to investigate HCCL

The country’s capital markets regulator Securities and Exchange Commission of Zimbabwe (SECZ) has ordered the Zimbabwe Stock Exchange (ZSE) to carry out an investigation to determine the impact an auction of Hwange Colliery Company Limited’s (HCCL) assets is likely to have on the company’s balance sheet and operations, it has emerged.

Nkululeko Sibanda

ZSE chief executive Alban Chirume
ZSE chief executive Alban Chirume

The debt-ridden coal miner in January disposed of some of its assets to meet its financial obligations which include a huge wage bill and payment of equipment sourced from India and Belarus.

HCCL, according to sources close to the local bourse, faces suspension from the ZSE if found to have violated the bourse’s listing requirements. This came after the SECZ directed the local bourse to probe the listed entity.

The looming suspension, the sources said, might land the coal miner in murky waters as investors and other stakeholders are likely to ditch the troubled company for fear of having their investments and interests prejudiced.

According to a letter in this newspaper’s possession and addressed to ZSE chief executive Alban Chirume, SECZ said the probe was a result of action taken by a “concerned investor.”

“The Commission received the attached court papers against Hwange Colliery Company Limited from a concerned investor (complainant),” part of Chinamo’s letter to the ZSE reads.

“The complainant is worried about the status of Hwange Colliery Company Limited as investors may be prejudiced. We require that you carry out an investigation into the matter and take appropriate action.”

Chirume confirmed to the Zimbabwe Independent the ZSE had received the SECZ letter and that the bourse was probing the matter.

“I can confirm that we have received a letter from the Securities Commission regards the Hwange Colliery Company Limited issue. They have asked us to investigate the situation at the company,” said Chirume.

He said ZSE had also been furnished with the court papers filed by the concerned investor whose name the Independent is yet to establish.

“We have in our possession the court papers and we are going through them as well. We need to appraise ourselves of the content of those papers,” Chirume said.

The ZSE chief highlighted there was a glitch the bourse would have to overcome before taking necessary action as directed by the SECZ.

“One major challenge that has arisen in this matter is that the complainant first decided to take this matter to court. As things stand, whatever we are going to do will be in contempt of court. All we have to do is wait until the court process is consummated and that is only when we can be able to act as per the directive,” Chirume added.

He said the law would take its course in the event there are violations of the ZSE operational listing rules.

“Indeed, when we are done with the court processes, we shall, as the ZSE, apply what the law advises us to do in the event there are violations to our rules and operating guidelines for ZSE-listed companies,” Chirume said.

HCCL has been in the headlines for the wrong reasons lately. The company has failed to pay its workers’ salaries whose bill is now estimated to be over US$55 million.

Earlier this year, the coal miner was dragged to court by workers over salary arrears said to be in excess of 15 months.

According to court papers seen by this newspaper, the company is saddled with current liabilities of over US$209 million.

The workers dragged the coalminer to court praying that the company be placed under judicial management. They argued that the company’s chances of recovery were very slim owing to poor management.

Reads part of the affidavit filed by the workers: “As at 2014, the company had a turnover of US$72 031 451 and operating at a loss of US$51 540 220 and total current liabilities of US$209 786 707.

“…The company is currently indebted to statutory creditors amounting to US$119 604 483. Outside these normal statutory payments, trade creditors are owed US$37 249 720. Added to these, there are loans owing to the PTA Bank and India Exim Bank of US$3 717 819 and US$31 717 819, respectively.”