eBusiness Weekly
Martin Kadzere
The proposed acquisition of ZimAlloys’ 70 percent shareholding by Balasore Alloys of India is hanging in the balance amid revelations that the Bombay Stock Exchange listed company has failed to meet the deadline to pay money for the equity.
Balasore Alloys, a Pramod Mittal group entered into a deal to acquire majority shareholding Zimbabwe Alloys consequent upon a scheme of arrangement sanctioned by the High Court on December 20, 2017. The company received the approval on January 8, 2018. The deal involves a cash payment of $16,5 million for acquisition of 70 percent shares from existing shareholders, according to Balasore.
It would also entail a further payment of $74,3 million to creditors towards injection of working capital and for capital expenditure. The payment to the creditors and the shareholders would be staggered, Balasore said in a statement recently.
Sources told Business Weekly that Balasore was supposed to have paid the purchase price by the first week of February, but six weeks after the deadline, the company had not yet paid as per the scheme of arrangement sanctioned by the High Court.
The sources said the company had only $10 million and wanted to borrow $80 million from the local banks. “It is clear they don’t have the money and wanted to raise money from local banks,” said one source who requested not to be identified.
“In fact, the company was actually coming up with different ridiculous proposals of paying, which were outside the scheme of arrangement sanctioned by the court in December.”
It also understood that Balasore approached the Ministry of Mines and Mining Development seeking a license to export fines before setting up beneficiation facilities.
“That they are ready to bring only $10 million, exporting chrome fines would have helped them to raise the money to pay the creditors and members,” the source said.
Further checks on Balasore have revealed that the company shareholders have strong links with Global Steel Holdings, which in
2004 wanted to invest in Zimbabwe Iron and Steel Company but the $400 million deal fell by the way side after it emerged the investor did not have the financial and technical capacity to revive the steel giant.
No comment could be obtained from ZimAlloys judicial manager Reggie Saruchera by the time of going to print. Sources however said failure by Balasore to fulfil its obligations meant the Saruchera might float another tender to invite other investors.
Businessman Farai Rwodzi and business tycoon Adam Molai are the majority shareholders of ZimAlloys.
ZimAlloys holds about 20 000 hectares of chrome claims in different parts of the country, which has proven resources of 72,25 million tonne of chrome ore. Apart from this, Zimbabwe Alloys Chrome, a wholly-owned subsidiary of ZimAlloys owns a ferrochrome smelter.
Zimbabwe holds the world’s second largest chrome ore reserves after South Africa.
