Tinashe Makichi Business Reporter
The Zimbabwe Asset Management Corporation has agreed to take over ZimAlloys’ $21 million worth of non-performing loans sitting with a number of local financial institutions as the company’s management works towards cleaning the balance sheet.
This comes as ZimAlloys is currently in negotiations with a potential investor to inject fresh capital to revive its operations.
ZimAlloys was placed under provisional judicial management on 24 July, 2014 and was then put under final judicial management in November the same year after its debt had risen to alarming levels.
The ferrochrome company currently owes over $60 million.
“We have managed to structure something with ZAMCO as part of our strategy to clean the balance sheet before an investor comes in. ZAMCO has already approved the structure where it is now going to take over part of our liabilities,” ZimAlloys judicial manager Reggie Saruchera of Grant Thornton of Camelsa told The Herald Business on Friday.
Grant Thornton Camelsa advisory manager Bulisa Mbano added that the $21 million to be taken over by ZAMCO forms part of the amounts owed to banks by the ferrochrome producer.
He said the remaining balance on the company’s $60 million debt will be repaid through equity.
Mr Mbano said they were currently in negotiations with a potential investor as the company steps up efforts to revive one of its smelters at a time when ferrochrome prices are on an upward trajectory.
“As you know ZimAlloys has a huge debt estimated at about $60 million and ZAMCO has come in to assist by taking over about $21 million largely owed to banks. Our idea is to clean our balance sheet to pave way for the new investor that we are currently in negotiations with.
“We want to make sure that one of our smelters is up and running to take advantage of the ferrochrome prices that have been going up of late,” said Mr Mbano.
ZimAlloys is focusing on strategies to build its capacity to beneficiate rather than export chrome ore in line with Government policy.
Efforts are being made towards the upgrade of Lalapanzi plant near Gweru, a move that will see the company increasing production to 7 000 tonnes per month.
ZimAlloys is also looking at upgrading its heavy metal separation plant at Sutton Mine in Mutorashanga.