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Mr Mutamangira

Bulawayo Bureau
Hwange Colliery Company Limited will retrench at least half of its more than 3 200 workforce in the second half of 2014 and hopes to conclude two loan facilities worth US$33,5 million at the end of May to recapitalise operations.In June 2012, the company retrenched 304 employees.

An update to shareholders yesterday quoted HCCL board chair Mr Farai Mutamangira saying the company would implement a raft of measures to turn around the beleaguered giant’s fortunes.

As part of plans to make it profitable, the company will be unbundled into six strategic business units: Hwange Colliery Holdings, Hwange Coal Mining, Hwange Plant and Equipment, Hwange Coal Processing and Cokeworks, Hwange Hospital and Hwange Properties & Estates.
HCCL also plans to realign senior management and appoint a chief operating officer. A consultant has already been engaged to rationalise costs.

“Staff rationalisation aimed at reducing staff complement by 50 percent of current and also reducing the wage bill by 50 percent. The retrenchment packages will be amortised against non-core assets and deferred financial instruments,” said Mr Mutamangira.

“The objective is to ensure that these divisions/SBUs are profitable as units and further seeking that they raise capital on the basis for their own balance sheets.

“Low current ratio balance sheet restructuring will be carried out to convert US$100 million of short-term debt to long-term debt and enable the company to meet its current obligations.”

The company recently turned down a US$50 million loan offer from shareholder Mr Nicholas Van Hoogstraten through his investment vehicle Willoughby to recapitalise the Hwange.

Willoughby wanted exclusive management control for an initial five years after its cash injection.

“At the end of May 2014, the company is looking forward to closing additional recapitalisation transactions to the sum of US$33,5 million as follows: US$15 million BEML/Eximbank of India facility and US$18,5 million BELAZ/PTA bank facility,” said Mr Mutamangira.

These loans come after negotiations for a four-year US$100 million facility from the Development Bank of Southern Africa failed to materialise.

HCCL’s operations, Mr Mutamangira said, remained constrained with the company producing 200 000 tonnes of coal against a target of 450 000 tonnes.

“The target for HCCL is to produce 450 000 to 500 000 tonnes of coal per month. This will assure HCCL of a monthly turnover of not less than US$18 million.

At December 2013 the company’s debt stood at US$172 million.