Debt-ridden Freda Rebecca Mine applies for judicial management
Daniel Nemukuyu Senior Court Reporter
The country’s biggest gold mining firm, Freda Rebecca Gold Mine, and nine others that fall under ASA Resources Group, are seeking to be placed under provisional judicial management citing viability challenges.
Freda Rebecca Gold Mine and the other nine firms – Freda Rebecca Holdings, Hunter’s Road Nickel Mine, Trojan Nickel Mine, BSR Limited, Greenline Enterprises, ASA Services Zimbabwe, Bindura Estates and Mwana Properties – also want the High Court to appoint Mr Reggie Saruchera of Grant Thornton Zimbabwe, as the judicial manager.
The firms contend that they are facing serious financial problems and are failing to service debts amounting to millions of dollars.
“The boards of the 10 applicant companies have passed resolutions for the companies to be placed under provisional judicial management,” reads the papers.
“The applicants are presently unable to service their debts when they fall due,” reads their application. The liabilities of Freda Rebecca Gold Mine and Bindura Nickel Corporation are presently in excess of the respective companies’ current assets, thus rendering the firms technically and practically insolvent.
“Freda Rebecca Gold Mine owes creditors the sum of US$31 331 914. The company is also facing litigation from various parties who include former employees and creditors.”
The dominance of the China International Group Corporation, which is a shareholder in ASA Resources, also exacerbated the crisis. The Chinese investor was accused of gross mismanagement between September 2015 and April 2017.
“During the period stretching from September 2015 to April 2017, the strategic direction of the ASA Group took a dramatic turn for the worse as a result of the activities of the Chinese investor and shareholder in ASA, China International Group Corporation,” read the papers.
“Management structures for operations in the Democratic Republic of Congo, South Africa and Zimbabwe were arbitrarily changed. Employees’ salaries were arbitrarily cut by 25 percent, leading to reduced employee morale.”
Several employees were fired during that period and the Chinese were imposed on key positions at the Zimbabwean operations.
“The group’s procurement policy was changed in order to favour Chinese suppliers,” the papers read. “On numerous occasions, Exchange Control Regulations governing the remittance of foreign currency were deliberately breached.”
In violation of the Exchange Control Regulations, the Chinese management externalised millions of dollars.
“At Bindura Nickel Corporation, an amount of US$2,7 million, which was part of a US$20 million loan raised through a smelter bond in March 2015, was unlawfully externalised under the pretext of remitting a deposit for the supply of technology,” the companies argued.
“The technology has not been received and the externalised money was converted into loan repayment to ASA at the instruction of Mr Yim Chiu Kwan, the then chairman of the board of directors of Bindura Nickel Corporation.”
The companies’ property, according to the application, faces attachment and auctioning over debts.
“The companies’ assets are at the risk of being attached and sold in execution,” the papers read. “There is a danger that, besides the bad publicity arising from the judgments, there is a real likelihood that an uncontrolled run of assets grabbing by creditors may take place.”
Provisional judicial management, the firms argued, will resuscitate them.
“The directors of the companies take the view that the problems afflicting the companies are temporary and can be overcome if the firms were placed under judicial management,” read the papers. “The judicial management regime will provide a moratorium in regards to their debts.”