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MarketScreener Homepage  >  Equities  >  ZIMBABWE STOCK EXCHANGE  >  Hwange Colliery Company Limited    HCCL   ZW0009011934

HWANGE COLLIERY COMPANY LIMITED (HCCL)
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Hwange Colliery : Chaos at Hwange as fight breaks out in the cockpit

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10/12/2018 | 02:45am CET

DISCORD has hit Hwange Colliery Company (Hwange), with the company’s senior management and the board fighting each other for control of the struggling coal mine.

ANDREW KUNAMBURA

The Hwange board set the ball into motion last week on Thursday when it indefinitely suspended two directors, acting managing director Shephard Manamike and finance and administration director Tawanda Marapira citing allegations of corruption.

The board alleged that the two made unauthorised payments, which prejudiced the company of substantial revenue, including payments to some dodgy service providers.

The board also accused senior management of diverting US$2 million, which had been set aside for development of virgin coalfields without the board’s authorisation.

“The company has witnessed unethical business practices characterised by financial improprieties, particularly unauthorised expenditure. The circumstances are unacceptable especially when the company was focused on production and sales. Due to the unauthorised financial transactions, the company failed to meet its key obligations due to its creditors and employees,” board chair Jiliana Muskwe said in a statement.

“The company currently is sitting on a stockpile (345 000 tonnes) which can be easily convertible to revenue, estimated to be around US$35 million, to enable it to address its short-term challenges. It is unacceptable that with such stock, the company fails to meet its financial obligations. The accumulation of a huge stockpile against high demand boarders on sabotage, which is why the board has moved to uproot. The mantra under the new dispensation is zero tolerance to corruption.”

Correspondence between the board and management, however, shows that Hwange management had actually successfully sought the board’s permission to convert the US$2 million into working capital.

The request was made in a letter dated September 19 and was approved on September 26 2018. According to documents in our possession, the management made the requisition after realising that the company was facing acute cash flow challenges due to depressed sales which led to its failure to meet its financial obligations, including paying contractors and funding the employee instalment scheme.

The company owes employees and creditors US$11 million, excluding US$1,5 million owed to creditors central to its day to day operations.

“The wage bill per month inclusive of the scheme is US$3,5 million. We have made sales of US$5,7 million per month on average for the past three months against a total cash requirement of US$11 million per month and this is what has led to the situation (indebtedness),” reads the letter by management to the board. Of the requested draw-down, which was to be replaced over two months from advance payments by the Zimbabwe Power Company, management said it would pay US$300 000 to creditors while US$550 000 would go towards fuel supplies. It also agreed that US$650 000 would be used to pay transporters and US$300 000 would go towards plant refurbishments. In its letter of approval dated September 26, the board acknowledged the company’s indebtedness and its capital requirements. “It is hereby resolved that the company coverts US$2 million worth of treasury bills set aside for western areas (the concerned virgin coalfields). It is further resolved that the US$2 million taken from the treasury bills shall be replaced from the company’s sales over a period of two months. It is further resolved that Mr Manamike be authorised to sign all documentation and do all such acts as necessary to give effect to the above resolutions,” board’s letter of approval reads. Sources at the colliery further said a vicious fight for the heart and soul of the company has since erupted, with the Muskwe board battling to remain at the helm despite having lost favour with Mines Minister Winston Chitando, who represents government which is the majority shareholder. In June this year, Chitando asked the board to step down to allow him to appoint new board members, but the board refused to do so after getting the solid backing of other shareholders.

The sources said the board was currently in the process of canvassing for support from the shareholders ahead of an extraordinary general meeting to be held before year-end.

On Friday, the sources said, board members flew to South Africa to meet with executives of a company known as Arcelor Mittal, which is a shareholder in Hwange as part of its canvassing spree.

A board member, who spoke on condition of anonymity, however said there was nothing unusual about the South Africa trip.

“Arcelor Mittal is a shareholder of Hwange and a coking coal off-taker. Hwange has been doing business with Arcelor Mittal for years. The board updates the shareholders on the state of affairs. This is in addition to the usual reporting obligations published year end and half year,” the board member said.

(c) 2018 The Zimbabwe Independent. All Rights Reserved. Provided by SyndiGate Media Inc. (Syndigate.info)., source Middle East & North African Newspapers

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NameTitle
Charles Zinyemba Manager-Medical Services
Valentine Vera Non-Executive Director
Juliana Muskwe Independent Non-Executive Director
Walter K. Chidhakwa Director
Wenceslaus Tarugarira Kutekwatekwa Non-Executive Director
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