Pula Steel shareholding agreement nears conclusion
Onalenna Kelebeile | Tuesday May 30, 2017 16:12
The High Court has placed Pula Steel under judicial management of Vijay Kalyanaraman, who believes that since the Citizen Entrepreneurial Development Agency (CEDA) is the major financier of the project, it should be offered major shareholding to replace BCL, which has also been put under provisional liquidation.
“Part of the petition to the High Court was for shareholding to be restructured to enable CEDA to become a major shareholder. BCL had been reluctant to cede its shares, but finally the issue will be resolved because I have been in contact with BCL lawyers who will make their position known very soon. If the shareholding agreement cannot be resolved, then the company would move into liquidation,” the judicial manager said.
He added that as per the court order, the creditors meeting should be held before June 4 and feared that creditors are bound to lose a lot if the company moves into liquidation as compared to when it is under judicial management. He added that other shareholders, the Virma family, Wealth Creations and CEDA have paid their subscriptions.
Kalyanaraman added that for the plant to be up and running, certain crucial matters have to be addressed such as placement of skilled workforce, electricity connection, licensing of the plant by relevant authorities, state of the plant, and whether there are enough orders for the billets to sustain it. Currently Pula Steel has one order.
“We are currently finalising employee claims. They will be paid their dues in line with the Employment Act and they are entitled to severance pay for the last 24 months and salaries for the last three months. We will be working with the Selebi-Phikwe Labour office and employees will have to submit their claims this week,” Kalyanaraman said.
All employees were retrenched March this year when the company went under judicial management.
The employees had already written letters to the Office of the President and Master of the High Court seeking interventions to have their benefits paid.
BCL Mine’s provisional liquidator, Nijel Dixon-Warren had said in a previous interview that he is still waiting for his attorneys to advice on what could be done in relation to the Pula Steel shares. He had also said nothing has been done yet regarding the ceding of BCL shares to CEDA.
Dixon-Warren had expressed optimism that the plant will survive the current challenges. The company has about 100 creditors with some owed substantial amounts of money and at the time it was placed under judicial management, there were already eight orders from creditors to attach its property.
“Though the company’s cash-flow is on red alert Pula Steel is not insolvent unless shareholders do not pump in some funds. The delay by shareholders to place Pula Steel under judicial management has put it deep into a financial mess running into millions. We are thankful to CEDA for committing to support the plant back into operation,” he said then.
Business Botswana considers Pula Steel as an opportunity for revitalising the economy of Selebi-Phikwe and the SPEDU region’s economic situation.
Presenting a draft report to the business community last Wednesday, Professor Happy Siphambe stated that Pula Steel remains a viable project. He said it is a project that offers great opportunities for revitalisation of the town’s economy in the absence of BCL Mine.
“It can also act as a catalyst for iron ore mining in Botswana. Major capital investment have already been invested in Pula Steel, hence major efforts have to be made to make a success of Pula Steel in one form or the other. Let us look into it seriously,” he said.
Pula Steel is the first integrated steel plant in Botswana and has all the hallmarks of the economic stimulus model. It is the first company in the country to process scrap metal into intermediate products called billets and further process those billets into different types of steel products.