The practitioners overseeing business rescue proceedings at Evraz Highveld Steel and Vanadium reported on Friday that the proposed transaction to sell the business as a going concern to International Resources Limited, of China, had failed.
In an operational and transaction update, Piers Marsden and Daniel Terblanche reported that, as of January 31, 2016, all of the conditions precedent had not been fulfilled or waived. “Consequently the proposed transaction has failed.”
The joint business rescue practitioners reported that they would now proceed in terms of ‘Proposal 3’ of the business rescue plan, which was published in mid-September.
The proposal “contemplates the sale of the business, or portions thereof, as a going concern, alternatively the sale of the company’s assets”.
A general meeting would be held at Highveld’s Elijah Mashiloane Hall, in eMalahleni, at 10:00 on February 23, to advise “affected persons” of the process to be followed.
In a subsequent statement, Marsden said he was encouraged by the progress that had been made within the business and stressed that the practitioners still felt there to be a "reasonable prospect" of Highveld being rescued.
“Government and our trade unions have also been extremely supportive throughout the period, most recently with the implementation of the Training Layoff Scheme, which buffers the company’s employees for a six-month period. In addition, the company has gained further support from the International Trade Administration Commission of South Africa, which increased the structural steel import duty to protect the industry.”
Marsden said the practitioners would continue with efforts to rescue the business.
“The best case scenario would be for the business to be sold as a going concern, given its importance in the local economy.”
Solidarity deputy general secretary Marius Croucamp said the union would support members affected by the process by ensuring, among other things, that the company followed "correct procedures".
“Most of Highveld Steel’s workers are currently undergoing retraining as part of a training layoff scheme, offering them temporary income while being retrained. Meanwhile, we will be in regular talks with the employer to mitigate the impact on our members as far as possible,” Croucamp said.
Solidarity represented about 400 of Highveld 2 242 employees.