THE High Court of Zimbabwe last week placed Zimasco under judicial management after the firm voluntarily applied for the order as global selling prices of ferrochrome continued on a downward slide.
Judicial management is a process aimed at assisting companies to manage their liabilities with all stakeholders in an equitable and orderly manner with the help of a court appointed administrator.
This comes after Zimasco management applied to the High Court in December seeking an order to be placed under the care of a judicial manager.
A judicial manager executes a turnaround plan to return the company to sustained viability in the shortest time possible.
The company’s application was initially opposed by Zimasco’s bankers, who had raised concerns about their status as secured creditors, demand independent review of the turnaround plan and be underwritten. However, after negotiations with the bankers, the judicial management process was seen as the best way forward for the ferrochrome producer.
Turnaround strategist, Reggie Saruchera of Grant Thornton, was appointed by the High Court as the provisional judicial manager for the company.
Saruchera and his team are working on the strategic review of the company’s business and operations as part of the reconstruction plan of Zimasco.
Prior to the granting of the Provisional Judicial Management Order, Zimasco and its major shareholder, Sinosteel Corporation of China, were working on a five-year business plan that is premised on various cost reduction and productivity enhancement strategies.
Under the five-year plan, the company will run its two East Plant furnaces from Quarter 3, 2016 provided its initiatives are supported by the relevant stakeholders and authorities.
The company feels the plan, which is based on a sustainable lower production cost base, will see the miner generate positive cashflows enabling it to settle its legacy and current liabilities.
Before underwriting the plan, Sinosteel Corporation engaged Deloittes Hong Kong, who are working in conjunction with Deloittes Zimbabwe, to review the plan.
Saruchera has acquired a reputation as a turnaround strategist in the market after successfully reviving Cairns and Blue Ribbons.
At Cairns, he secured an investor who committed millions to the business and brought in Tanzanian firm, the Bakhresa Group, to inject US$40 million in the next five years to turn around the fortunes of the milling company.
It is hoped Saruchera will achieve the same results at Zimasco.