MILLING and timber manufacturing company Border Timbers says it has entered into negotiations to restructure its long-standing debt with a German bank DEG over a US$5,5 million debt up to full-year 2022 as foreign currency shortages continue choking the entity.
The debt dates back years before the firm was placed under judicial management.
Judicial manager Peter Bailey, who says Border Timbers’ negotiations towards exiting judicial management are at an advanced stage, told businessdigest on the sidelines of the company’s annual general meeting that although the firm has cleared all its local obligations, it is still seized with the foreign debt.
As of June 30 2019, the company had settled US$659 000 of the principal debt. Border Timbers was placed under provisional judicial management in January 2015 and went into final judicial management in April 2016.
“This has been caused by limited access to foreign currency. We have been battling on that front but as we raise the money we will be paying the debt. It was a long-term debt anyway but we need a few years year to be able to clear it since we are relying on our exports income,” he said.
“It was a US$6,1 million debt from a German bank (DEG) but I won’t tell you what it means. As at June 30 2019 we had about US$5,5 million on our books after we cleared a certain amount along with our local debts which we have cleared 100%. The foreign debt was originally US$6,1 million while the local debt was about ZW$4 million.”
The unrealised exchange loss on foreign debts amounting to ZW$10,784 million were realised in the five months to May 2019.
Border Timbers also cleared in excess of ZW$4,5 million to trade creditors and other creditors as well as settling the principal amount of ZW$929 000 to the Zimbabwe Asset Management Company (Zamco).
Zamco took over in excess of ZW$6 million owed to banks by the group as it sought to clean up its balance sheet.
Bailey says the company, having returned to profitability, is now in a position to service the foreign debt.
In the year to May 2019, Border Timbers’ revenue saw positive improvement compared to prior period, mostly driven by better quality lumber.