Johannesburg - Evraz Highveld Steel and Vanadium business rescue practitioners still hold out hope that the sale of assets will yield better results than liquidation.
“It is the joint business rescue practitioners’ view that proceeding with Proposal 3 will result in a better outcome for all affected person than in liquidation,” Matuson Associates said in a statement yesterday.
Read: Evraz mulls closing SA unit
Matuson Associates are in phase three of the rescue process to wind down South Africa’s second-biggest steel producer. The process is expected to include the sale of the business or parts of it and alternatively the sale of Evraz Highveld’s assets.
The practitioners said the assets would be placed in three categories depending on whether they could be converted into cash, sold as movable assets or sold as operational plants.
They previously said they had obtained proposals from two independent parties as well as from management, and that in a general meeting held with affected parties last month they presented the plan which was designed to generate cash within the constraints of the current market dynamic.
“The plan yields R1.134 billion being adequate to cover all employee severance packages, secured creditors, costs and pay a minimum dividend to creditors within the range contemplated in the plan,” the practitioners said.
The rescue plan is expected to run until March 2019.
The plan suffered a setback when the Industrial Development Corporation became the latest creditor to apply for an urgent court interdict to reclaim a R150 million loan it loaned to the company.
Despite the challenges, Evraz chief executive Johan Burger said he was optimistic the business could be salvaged.
Evraz went bust and applied for business rescue last year amid the downturn in the South African steel industry, which was exacerbated by cheap Chinese steel imports.
Business rescue
A proposed transaction to sell the business to China-owned International Resources fell through as a result of conditions precedent not being met by the January 31 deadline and the company failing to get the required approval from the Competition Commission.
It also could not reach an agreement with the Department of Environmental Affairs by the deadline, resulting in the retrenchment of its 2 000-strong workforce in February after running out of funds to pay their salaries.
Employees have lodged a R292.8m claim including R54.2m for their February salaries, R101.8m for severance packages, R32m for leave, R57m for notice pay and R46m for bonuses. Evraz had received 552 claims worth R2.3bn.
Trade union Solidarity deputy general secretary Marius Croucamp said the company had run out of options.
“They have no other option, if there are no buyers for a plant. They have no choice but to sell assets to recoup cash for creditors including employees,” Croucamp said.
BUSINESS REPORT