eBusiness Weekly
Taurai Mangudhla
An alleged impasse pitting two major creditors of Zimbabwe Stock Exchange-listed timber firm, Border Timbers and its administration manager has stalled the group’s plans to quickly exit judicial management.
The timber producer and processor’s efforts to come out of judicial management are taking longer than anticipated, 10 months after the company announced that it was now operating on solid ground.
The clash between two major creditors and the provisional judicial manager, has been identified as the major reason behind this lack of progress, Business Weekly has learnt.
Border Timbers judicial manager Pater Bailey told a creditors meeting in late January that the company was now operating profitably and ready to implement a scheme which at the time awaited approval of a major foreign creditor.
Ten months on, the company is still under judicial management, raising questions of Baileys capacity to deliver on his promise to take the company out of judicial management.
Information at hand suggests that a new proposed scheme of arrangement had been passed by all creditors except two. The two unnamed creditors are so material they can block the scheme and force Bailey to engage them to get their support.
“Two major parties have to agree, they are so big that they may block the scheme of arrangement if they do not agree with it,” said a close source.
“What has been happening is that these two agree in principle, but it appears they have individual demands and are competing to be prioritised. Each one of them is competing to be given priority over the other. Once they get round the table and agree then they are home and dry.
“If the judicial manager fails to get these two on board then they can’t move because they will just block it in court. It will be a waste of resources,” the source added.
Border Timbers was placed under provisional judicial management in January 2015 and went into final judicial management in April 2016. The company had borrowings in excess of $20 million including $6 million owed to FBC Bank, NMBZ and Ecobank, assumed by the Zimbabwe Asset Management Corporation (Zamco) in November 2015.
In the company’s annual results for the period ended June 2017, Bailey said: “I expect to approach the High Court shortly for permission to hold scheme of arrangement meetings with each class of creditor. If the proposals being put to each class of creditors are approved by all with the appropriate majorities, I will recommend to the Master of the High Court that the company be taken out of judicial management as it is operating successfully with excellent management.”
“I would like to commend the management and staff, creditors, bank lenders and the Master of the High Court for their co-operation, patience and support as the “company continues on its turnaround strategy,” he added.
Turnover for the period to June 2017 decreased by 27 percent from prior year as a result of reduced mill intake volumes in line with sustainable forestry management strategies coupled with the slow start in contracted orders on the poles, the company said.
“Other income decreased by 50 percent from $6,4 million in FY 16 to $3,2 million, this was mainly due to a decrease in exports which resulted in lower freight recoveries. Selling and distribution expenses were down 62 percent from FY 16 reflecting the reduced sales volumes and success in some cost containment measures,” said the company.
