Johannesburg - Evraz Highveld Steel and Vanadium, South Africa’s second-largest steel producer that went bust last year, has “reinvented” its assets in a bid to generate revenue to pay its creditors and the 1 800 employees who have been retrenched.
Joint Business Rescue Practitioner, Piers Marsden, told Evraz creditors at an annual general meeting on Friday about plans to reignite economic activity in eMalahleni by converting assets into an industrial park.
The creditors include the SA Revenue Service.
Highveld, which closed shop and retrenched about 1 800 employees, needs revenue as it owes employees R300 million in retrenchment packages.
Marsden said the company was prioritising retrenchment packages and so far had paid R30m to employees.
He said Evraz also had to repay the Industrial Development Corporation’s R150m loan settling its debt with employees and R2.3 billion to creditors, including a R689m claim by the taxman, which the company has disputed.
“We plan to re-invent the company’s assets into an industrial park with several operators on site. We are trying to make the best of a very bad situation, and we do not want a situation similar to that of the Blyvoor Mine, whose assets were stripped and taken over by illegal miners after it closed down,” Marsden said.
Leasing
The industrial park, which was expected to open up revenue to pay creditors, would include the leasing of rail infrastructure, said Marsden, who was confident that the demand for leasing rail sidings were high given that Transnet wanted to move the transportation of goods from road to rail.
Marsden also said that the company’s 44 offices and workshops would be leased for rental income, and that 12 proposals had already been received to operate these offices.
The heavy section steel mill, which closed down when the business was wound down, would be restarted in the next six months, he said.
“We expect the creation of 400 jobs once the steel mill is up and running,” he added.
Highveld folded as a result of the dumping of cheap steel from China, the high electricity costs and its ageing equipment taking a serious toll on its balance sheet.
Previous bids to buy it failed owing to the company’s environmental legacy.
In July, the business rescuers said South Africa’s biggest steel producer, ArcelorMittal South Africa (Amsa) and the Industrial Development Corporation were looking at supplying blooms and slabs to the idled producer for it to process into heavy structural steel.
Highveld creditors were on the brink of collapse, and a supplier who spoke on condition of anonymity on the sidelines of the meeting said the business rescue process had been painful.
Initiatives
“We welcome the initiative announced today, and we understand that they (Highveld) have done all that they could do, but this has been painful. We have to wait for the initiatives to bear fruit,” he said.
Marsden said the best case scenario would be a 13c dividend paid to creditors, up from a previous estimate of 10c thanks to the initiatives.
He urged creditors to be patient. “Unfortunately patience is going to be the name of the game.”
BUSINESS REPORT