BY FIDELITY MHLANGA
MIDLANDS-based ferrochrome producer, ZimAlloys has exited external administration after judicial managers Grant Thornton secured a US$60 million injection for settling its debts, businessdigest can report.
A spokesperson for the firm’s judicial managers said an investor who injected the funding had moved to the plant and preparations to kick-start production were underway.
The giant ferrochrome processor slipped into judicial management in 2013 after mothballing operations at the height of economic upheavals of 2008, when 500% billion hyperinflation grounded the economy and toppled the Zimbabwe dollar.
ZimAlloys’ operations were hamstrung by high gearing at the time, leading to the decision to suspend operations.
In an interview with businessdigest this week, judicial manager Bulisa Mbano was not at liberty to disclose the investor, but confirmed that workers had moved back to the site.
He said Zimalloys’ legal counsel had advised that it would be premature to disclose the suitor before several key aspects of the transaction have been ironed out.
“At this stage we have settled all creditors totalling US$60 million,” Mbano said on Tuesday.
“The new investor is doing an assessment on the A3 furnace to finish up its refurbishment,” Mbano said.
In the communique, ZimAlloys said: “We are pleased to advise that following the restructuring and reorganisation of Zimbabwe Alloys Limited and Zimbabwe Alloys Chrome (Pvt) Ltd we have secured an investor. The investor has since initiated the recapitalisation of the mining and smelting operations of the group”.
“On the 26th of May 2021, the High Court of Zimbabwe granted an order to remove Zimbabwe Alloys Limited and Zimbabwe Alloys Chrome (Pvt) Ltd from judicial management. The new board and management of Zimbabwe Alloys Limited and Zimbabwe Alloys Chrome have since assumed management control over the affairs of the companies,” it said.
The ZimAlloys administrator last year terminated a US$100 million investment deal which the chrome smelting company had clinched with Indian investor, Balasore Alloys Limited (BAL), after the Asian giant failed to honour its commitment within agreed timeframes.
BAL approached the High Court in an attempt to halt Grant Thornton from terminating the contract. The High Court approved an interdict in favour of BAL, blocking the judicial managers from scouting for other prospective investors. Subsequently, Grant Thornton challenged the High Court decision at the Supreme Court.
Formerly-owned by Anglo American plc, Zimbabwe Alloys was acquired by Benscore, a company that is controlled by business magnate Farai Rwodzi.
He acquired the asset in 2005 for the equivalent of US$10 million, according to financial statements.
ZimAlloys, together with Zimasco, jointly control the majority of Zimbabwe’s chrome fields, mostly found along the Great Dyke mining belt, one of the region’s richest mineral fields. The two companies have since ceded part of its ferrochrome reserves in line with a government directive.