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Tinashe Makichi Business Reporter
Manufacturing firm Steelnet Zimbabwe Limited’s Bulawayo-based division, BMA, is likely to be sold at value of $1,2 million while interested suitors have voiced concern over the decline in realisable values in Bulawayo.

Steelnet was formed in 2002 through the unbundling of the Africa Resources Group. Steelnet was placed under provisional judicial management in 2011 and the provisional judicial management order was confirmed in February 2012 and was eventually placed under final liquidation in February 2014.

Steelnet was placed under final liquidation in May this year while the other units, Tube and Pipe and Hastt, have been sold except for BMA Fasteners which makes industrial fasteners and mining bolts.

In a presentation to creditors, Steelnet judicial manager Mr Christopher Maswi said the forced sale value of BMA is an indicator as to how much is likely to be realised from the sale of the assets excluding selling costs.

“The forced sale value is defined as the price at which the asset might reasonably be expected to sell, subject to a limited and defined period for disposal. The forced sale value is much lower than the last bid value which was $1,8 million.

“Due to deterioration of the economy and the fact that the business is in Bulawayo the realisable values continue to decline. The company’s operations have been hampered by lack of capital resulting in it being placed under judicial management in 2011 and the subsequent liquidation,” said Mr Maswi.

The liquidator appointed a real estate agent to do the valuation of BMA Fasteners assets and the forced sale value reached a value of $1 257 500 for the plant, equipment, land and building.

Mr Maswi said of all the bids that were made for Steelnet’s group companies were paid except for BMA. He said the liquidator has engaged a number of potential bidders and only one bidder has formalised his expression of interest in BMA.

The bidder requested to purchase land and buildings only as his funders are not willing to fund plant and equipment.

Mr Maswi said the bidder requested a discount on the price after the due diligence with the banks that are prepared to fund the transaction.

“I then engaged a estate agent (Ruby Auctions Real Estate) to conduct the valuation of assets and the forced sale meant that land and buildings will be sold at $900 000, plant and equipment $357 500 bringing the total to $1,2 million,” said Mr Maswi.

Steelnet has successfully disposed of TPI and Hastt and the proceeds were distributed though the proceeds covered statutory payments, secured creditor on TPI land and buildings and 76 percent of preferred portion.

Mr Maswi said about $1,9 million was paid to creditors leaving a balance of about $5,3 million from an approved amount of about $7,2 million.

The judicial manager proposed that the assets for BMA be sold separately by auction, that is, land and building as one unit and the other assets mainly plant and equipment to be sold individually.