One of the two business practitioners nominated to manage Evraz Highveld Steel and Vanadium’s business rescue proceedings has confirmed that the company will continue to trade until the process has been concluded, telling Engineering News Online that the process could take more than six months.
“Should we be successful [in] securing funding on this assignment, the process could be shorter. The company will, however, continue with its trading activities until such time as we have secured funding. Should we not be successful with our endeavours, there is an obligation o[n] the appointed practitioners to terminate the process,” Mazars business rescue services director Daniel Terblanche outlined in a written response.
The vertically integrated steel and vanadium slag producer initiated voluntary business rescue proceedings earlier this week, citing an inability to meet its short-term obligations as a result of historical operating difficulties and sustained financial losses within a capital-constrained operating environment.
The decision came despite the recent implementation of a turnaround plan that looked to improve the steelmaker’s fragile financial position, which had been negatively impacted by weakened global steel and vanadium markets and a “severe” reduction in domestic steel demand.
Terblanche explained that, after being nominated as business practise practitioners, he and counterpart Matuson & Associates director Piers Marsden now awaited formal appointment by the Companies and Intellectual Property Commission, after which they would proceed with the administration of this assignment.
“The first meeting of creditors will be held within a period of ten business days from our appointment. The business rescue proposal must be circulated to all the creditors within 15 business days from the date of the first meeting of creditors and, within ten days thereafter, a second meeting will be held with the creditors,” he said.
In terms of the New Companies Act, a temporary moratorium would be established on the rights of claimants against Evraz Highveld or in respect of property in its possession.
“For a period of three months, no creditors can continue or [start] with legal actions against the company,” he commented, confirming that the retrenchment of staff as a result of the process was “always a possibility”.
“The business rescue process is, however, a very transparent and inclusive process, so employees or any affected union would always form part of the negotiations,” he advised.
Terblanche’s comments came a day after majority union Solidarity said in a statement that it would protect the interests of its members employed by the steelmaker, confirming that the company had issued a notice to the trade union indicating that, owing to financial and operational challenges, it had “no choice” but to apply for business rescue.
Evraz Highveld Steel and Vanadium has not responded to Engineering News Online’s request for comment.