Zisco defers crucial meeting

HARARE - Beleaguered steel maker, the Zimbabwe Iron and Steel Company (Zisco), has postponed its crucial extraordinary general meeting (EGM), which was scheduled for tomorrow, due to a “delay in the establishment of the data room containing documents for inspection”.

The meeting was to discuss the company’s debt, which is estimated to be about $500 million, owed to both local and international creditors.

Government has since gazetted a debt assumption Bill for Zisco, once one of Africa’s largest integrated steel works with the capacity to produce more than one million tonnes of the commodity annually, to clear the way for its takeover of the company’s obligations.

The move will pave way for takeover of the company by a Chinese company R&F through its unit called Tian Li, which is expected to invest $1 billion into Zisco.

This week, Zisco company secretary Munashe Mabeza, sent out a notice to shareholders announcing that the meeting has been moved to next week Thursday.

“Shareholders are advised that the extraordinary general meeting (EGM) that was expected to be held in the company’s boardroom...on Thursday, February 8, 2018....will now be held on Thursday February 15, 2018 at the same venue and time,” Mabeza said.

“The reason for the change of dates is that, due to circumstances beyond the company’s control, there was a delay in the establishment of the data room containing documents for inspection. The postponement will afford any shareholders who wish to visit the data room sufficient time to do so.”

Announcing the EGM a fortnight ago, directors of the Zisco board chaired by Nyasha Makuvise, said the company will seek minorities’ consent for the takeover of its debt by government, in return for the cancellation of their shares and any pre-emptive rights.

Zisco’s minorities hold about 11 percent shareholding in the steelmaker.

Should that resolution be voted for by shareholders, Zisco’s board will immediately cancel 22 011 261 ordinary shares held by minority shareholders in the company.

The shareholders will also be asked to ratify an agreement entered into for the sale of Zisco’s entire assets to Tian Li, with tagged assets, which include coke ovens, being sold to ZimCoke.

Government holds an 89 percent stake in Zisco, and the balance is held between Lancashire Steel, Stewart & Lloyds and Tanganyika Investments.

Zisco ceased operations in 2008 due to choking financial constraints and its opening has been a matter of false starts in the past six years.

The debt includes outstanding salaries to workers, as well as statutory obligations to the National Social Security Authority and the tax collector, the Zimbabwe Revenue Authority.

A significant part of the debt is owed to international creditors.

In 2011, an Indian investor, Essar Africa Holdings (EAHL) took over Zisco and rebranded it to NewZim Steel after signing a $750 million deal with government to take over and resume operations at the company.

Government hoped that the Indian firm would take over the company’s debts after it acquired iron ore mining unit Buchwa Iron Mining Company (Bimco) and rebranded it NewZim Minerals, which was earmarked to take over vast iron deposits at Ripple Creek in Kwekwe and Mwanezi Iron Ore claims in Chivhu, some iron claims in Hwedza and Gwanda, formerly held by Zisco.

Bimco held the rights to iron ore claims for feedstock into Zisco operations.

But, EAHL pulled out of the Redcliff-based steel producer in 2015 due to complications involving the steel-maker’s global debts, sealing the fate of the deal, which first stalled due to bickering over mineral concessions within the power-sharing government which ended with Zanu PF’s victory in the 2013 polls.

The deal later suffered from government pressure to have the Indian firm take-over all government debts.

Essar had pledged to restore Ziscosteel to its production capacity of 1,2 million tonnes of steel a year within 18 months of operations.

— The Financial Gazette

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