Pula Steel goes under the hammer
Mbongeni Mguni | Friday July 27, 2018 12:51
Pula Steel was the first integrated steel plant in Botswana using scrap metal to produce steel billets, an intermediary steel product. Built at a cost of P130 million in 2015, Pula Steel fell into technical and financial problems that saw intermittent operations before eventual closure last March.
The company, majority owned by BCL Mine and with shareholding from CEDA and founders, the Verma family, was placed in liquidation last October, owing creditors an estimated P100 million.
On Wednesday, liquidator, John Hinchliffe told BusinessWeek that next month’s auction of movable items would reduce the costs associated with storage while proceeds from the sale would help finance the liquidation process.
The auction to be held in the north-eastern town, will involve items ranging from vehicles to desks, chairs and mattresses.
“We have proposed that the plant be sold as a going concern and not piece-meal, and thus the items being auctioned next month have no association with the productive assets,” he said.
“The auction is in line with the approvals granted by the creditors at their meeting in May and is designed to save storage expenses and raise funds.”
He said the main plant was undergoing assessment by experts who have experience in disposing of similar plants. The assessment should be complete by month-end.
“We will go to tender on that for someone to take over the operation of the plant, but at this point we cannot say when that will exactly take place.
“Creditors granted approval for this process, but the actual sale of the plant when a buyer makes an offer, will go through them again. “The work now is focussing on the assessments of the plant by our experts,” he said.
At one point producing 100 tonnes daily, Pula Steel was amongst BCL Mine’s Polaris II projects which were designed to extend the mine’s life through diversified investments.
BCL injected a total of P111.2 million into Pula Steel and is the mothballed company’s largest single creditor. CEDA is believed to be the second largest with outstanding due of about P15 million, followed by the Botswana Power Corporation with P10 million.
Pula Steel is estimated to have at least 100 creditors on its books waiting for recovery of their dues.