Ferrochrome producer, ZimAlloys’ creditors, have approved a scheme of arrangement that will see it extinguishing the firm’s $60 million debt.
Following the approval of the scheme of arrangement, ZimAlloys is now waiting for a court order before a new investor can come in.
It is understood that one of India’s leading ferrochrome manufacturers, Balasore Alloys — which is controlled by the Mittal family — is looking to takeover ZimAlloys.
Once Balasore Alloys takeover Zim Alloys, the firm is expected to pump in $100 million to revive the company.
Balasore Alloy, formerly Ispat Alloys Limited, is part of the renowned Ispat group of companies, promoted by the Mittals.
ZimAlloys judicial manager Reggie Saruchera told Business Weekly that they have to complete the legal processes before the investor comes into the company.
“We are waiting for a court order and the creditors have since approved the scheme of arrangement. Once the legal processes are done then the investor will come in,” said Saruchera.
The former Anglo American Plc ferrochrome producer, which ceased operations in 2008, was placed under provisional judicial management on July 24, 2014.
Zim Alloys was then put under final judicial management in November the same year after the ferrochrome producer’s debt has risen to alarming levels.
Its $60 million debt has been scaring potential investors.
Last year, the Zimbabwe Asset Management Company (Zamco), a special purpose vehicle created by the Reserve Bank of Zimbabwe to hive off debts from struggling companies to free their balance sheet, agreed to take over ZimAlloys’ $21 million worth of non-performing loans.
The loans were sitting with a number of local financial institutions.
This provided an opportunity for the judicial manager, Saruchera, to source an investor.
ZimAlloys, which was sold to the Farai Rwodzi-led Benscore consortium for the equivalent of $10 million in 2005, failed to take-off as expected due to poor performance attributed to the closure of its four furnaces, poor global metal prices and escalating operational costs.
The ferrochrome producer is focusing on strategies to build its capacity to beneficiate, rather than export chrome ore, in line with Government policy.
Efforts have been made towards the upgrade of the Lalapanzi plant near Gweru, a move that will see the company increasing production to 7 000 tonnes per month.
Zim Alloys is also looking at upgrading its heavy media separation plant at Sutton Mine in Mutorashanga.
The firm has since ceded 50 percent of its ferrochrome reserves to Government, which ordered the two ferrochrome giants, Zimasco and Zim Alloys, to surrender part of their chrome claims.
ZimAlloys had 32 000 hectares.