Balasore’s ZimAlloys takeover bid collapses

20 Apr, 2018 - 00:04 0 Views

eBusiness Weekly

Martin Kadzere
Zimbabwe Alloys has terminated the agreement it had entered into with Balasore Alloys for the disposal of its 70 percent shareholding to the Indian firm for $90 million. This is in spite insistence by Balasore that the deal is still on but is awaiting conditions precedent. Judicial manager Reggies Saruchera told Business Weekly yesterday that the deal collapsed after Balasore failed to raise the funds to pay for the shareholding.

“We want an investor who brings in money, not just promises. Going forward we will be looking for another investor or other strategies to revive the company,” said Saruchera.

Balasore, a Pramod Mittal group entered into a deal to acquire majority shareholding ZimAlloys consequent upon a scheme of arrangement sanctioned by the High Court on December 20, 2017. The company received the approval on January 8, 2018.

The deal involved a cash payment of $16,5 million for the acquisition of 70 percent shares from existing shareholders. It also entailed a further payment of $74,3 million to creditors towards injection of working capital and for capital expenditure.

“The deal is dead because Balasore has failed to pay,” said one source who spoke on condition of anonymity. “Several options (to pay) were put on table, including depositing the money in the escrow account under the Reserve Bank of Zimbabwe, but still they failed.”

It is understood that Balasore Alloys was supposed to have paid the purchase price by the first week of February as per the scheme of arrangement sanctioned by the High Court.

Earlier checks on Balasore revealed that the company shareholders have strong links with Global Steel Holdings, which in 2004 wanted to invest in Zimbabwe Iron and Steel Company but the $400 million deal fell by the way side after it emerged the investor did not have the financial and technical capacity to revive the steel giant.

ZimAlloys–under finial judicial management–holds the second largest chrome resource.

ZimAlloys holds about 20 000 hectares of chrome claims in Zimbabwe, which has proven resources of 72,25 million tonne of chrome ore. Apart from this, Zimbabwe Alloys Chrome, a wholly-owned subsidiary of ZimAlloys owns a ferrochrome smelter.

Of its claims, only 15 percent have been explored. Zimbabwe holds the world’s second largest chrome ore reserves after South Africa. Sources said ZimAlloys “several” options to revive the company were being considered.

The takeover of Balasore would have provided Balasore with opportunity to penetrate the chrome ore business in the region and to become a dominant player in the global ferrochrome market.

The company claimed it had several large producers and users of chrome ore and ferrochrome from China who visited the plant and expressed interest in buying the resource. Businessmen Farai Rwodzi and Adam Molai are the majority shareholders of ZimAlloys.

It was founded in 1949 by a consortium led by John Brown Group. In 1965, it was taken over by Anglo America Corporation, which it disposed of to Benscore Investments 40 years later. ZimAlloys was the first company in Africa to own ferrochrome plant.

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