BCL kisses P50m goodbye as Pula Steel sinks
Mbongeni Mguni | Thursday July 6, 2017 18:46
Under an ambitious diversification strategy called Polaris II, BCL Mine invested billions in various projects, including Pula Steel, an iron and steel plant located in Selebi-Phikwe.
Pula Steel however experienced various challenges eventually retrenching all employees and going into judicial management in March, at a time when BCL Mine held 67% equity.
Yesterday, Investment, Trade and Industry minister, Vincent Seretse told Parliament that BCL had invested a total of P111.2 million in Pula Steel, with P47.5 million of this investment taking place during the course of 2016, the same year BCL itself entered judicial management.
BCL’s provisional liquidator, Nigel Dixon-Warren told Mmegi that of the P111.2 million in investment, at least P50 million was equity which “was gone” as the shares were of no value as long as Pula Steel was under judicial management.
Instead, Dixon-Warren is hoping part of the P60 million or so owed to BCL as debt by Pula Steel can be recovered under a plan involving other shareholders in the failed steel plant.
The other shareholders include the Citizen Entrepreneurial Development Agency (CEDA), the Verma family and a company called Wealth Creations.
“The shareholders in Pula Steel had an agreement signed which says if any of them underwent liquidation, that shareholder would be forced to sell its shareholding to the others,” he said.
“This is what happened to BCL and I’m going through the process of transferring our shareholding in Pula Steel to the others right now. However, the shares are of no value because the company is under judicial management.”
Last week, Pula Steel judicial manager, Vijay Kalyanaraman told Mmegi that the plant’s creditors had authorised him to seek a P28 million injection of capital from CEDA, the Verma family and Wealth Creations.
Part of these funds will go towards restarting operations and also paying back a portion of creditors’ debt. Pula Steel owes its creditors, who include BCL, about P100 million.
The other shareholders in Pula Steel have until July 14 to decide whether to inject more funds into the failed plant. According to Kalyanaraman, if the remaining shareholders opt not to exercise their rights and no other investors express interest to buy Pula Steel shares before the next creditors meeting slated for August 4, Pula Steel will then be placed into liquidation.
Dixon-Warren said support would be given to Pula Steel’s efforts. “The hope is that the shareholders will come to the party and get the plant operating again, so that debts can be repaid to the creditors,” he said.