Border faces ZSE suspension

HARARE - Forestry group Border Timbers Limited (Border Timbers) could be suspended from the Zimbabwe Stock Exchange (ZSE) after it applied to be placed under judicial management to fend off creditors, market analysts have said.

The application, made last month, was mainly prompted by litigation from one of its major creditors.

While the ZSE’s chief executive Albany Chirume had not responded to questions sent to him on Monday to clarify Border’s fate on the bourse, an analyst who preferred anonymity said “according to ZSE listings requirements, any company which voluntarily applies for judicial management will also automatically apply for temporary suspension of its shares from trading on the stock exchange”.

He said the suspension will “pave way for the company to put its house in order” before re-applying for the suspension to be lifted.

This comes as several companies – including Cottco Holdings, Phoenix Consolidated Industries and Cairns Holdings – have been suspended from the stock market after applying for judicial management.

Border, which has retrenched 800 employees, nearly a third of its workforce, in the past year citing high labour costs, has been feeling the heat of the economic meltdown after it was demerged from parent company Radar Holdings in 2013.

It currently employs 1 700 workers.

Last year, the group sold its loss-making subsidiary Border Timbers International, writing off $4,5 million in the process, as it moved to restructure in a bid to stay afloat.

The company also struggled to pay its annual fees to Zimbabwe Stock Exchange amounting to $13,000 in the prior year.

“Over the last 12 months, the company has undergone a comprehensive restructuring exercise, the benefits of which are now being seen in lower production costs,” said Border upon applying for judicial management.

“The Board believes that the company now needs to address its financing arrangements with regards to both cost and tenor and that will be best achieved under protection of Judicial Management.”

The company said it remains viable, with positive cash-flows only mitigated by high finance costs, and believes going under judicial management will help protect the 1 700 workers it currently employs.

Border owns and manages five plantations, namely Charter, Sawerombi, Sheba, Imbeza and Tilbury in the eastern highlands.

Its shares traded at 14 cents on Wednesday, while its market capitalisation stood at $8,6 million.

Meanwhile, the ZSE has failed to attract any new listings since 2009 due to a depressed economic situation.

A recent report by Econometer Global Capital predicted that the dry spell on the local bourse would persist this year.

“No new ZSE listing for the entire year with the blue chip stocks such as Delta, Econet, PPC , BAT Zimbabwe, Hippo and OK Zimbabwe to dictate pace of trading activity on the local bourse – these counters will offer defensive qualities that can limit the downward risk of equity portfolios,” read part of the report.

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