TRI-listed Hwange Colliery Company Limited (HCCL)’s proposed rights issue is set to go ahead following the completion of validation of the money government is owed by the coal miner in tax liabilities, the Financial Gazette’s Companies & Markets (C&M) can report.
Government, a 37 percent shareholder in the country’s largest coal miner, intends to convert HCCL’s debt to shares. This process would later be followed by a US$88 million rights offer.
British business magnet, Nicholas Van Hoogstraten, controls 16,76 percent of HCCL through his Messina Investments.
The Zimbabwe Stock Exchange-listed coal miner, which also trades pockets of its shares on the London and Johannesburg stock markets, is saddled with a US$160 million legacy debt, which includes what is owed to employees in unpaid salaries (US$50 million), the Mining Pension Fund (MPF) (US$25 million) and ZIMRA (US$61,9 million).
Acting board chairman, Jemister Chininga, confirmed the development.
“We are expecting details of the rights issue to be published soon,” said Chininga, without giving details.
“I can’t give further details but we are working flat out to clear our debt overhang.”
Chininga said HCCL had agreed to spread the debt with MPF over five years while an agreement with employees had been reached to clear salary arrears.
HCCL is facing challenges largely due to recurrent breakdowns of some of the machines recently acquired from BEML of India under a US$13,3 million vendor financed transaction facilitated by the Export-Import Bank (Eximbank) of India.
While production should have increased since the commissioning of the equipment in June last year, output has remained low.
Hwange was targeting monthly output of 450 000 tonnes following the commissioning of the equipment.
Two months ago, HCCL produced 200 000 tonnes of coal, up from about 70 000 tonnes produced in October.
Govenment recently granted Hwange new coal concessions in Lubimbi and western areas.
The concessions, with an estimated underground resource of 750 million tonnes, are expected to increase the lifespan of the coal mine by more than 70 years.
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