Steel producer Evraz Highveld Steel and Vanadium announced on Wednesday that the Department of Labour had put a “pause” to Training Layoff Scheme (TLS) payments in response to confirmation that the proposed sale of the business to International Resources Limited (IRL), of China, had failed.
The company, which is in business rescue, said in a statement that it accepted its obligations to pay employees’ remuneration, but that due to its “dire cash flow constraints”, it was “not in a position to honour its obligation at this stage”.
Highveld said it would make every effort to secure additional funding to meet its salary obligations, but offered no details as to the possible sources of such funding.
The IRL transaction collapsed after the conditions precedent were either not fulfilled or waived by the January 31 deadline. The business rescue practitioners were currently seeking to sell individual components of the enterprise as going concerns and preparing to dispose of non-productive assets.
Highveld CEO Johan Burger said in a statement that the company was disappointed with the development, “as we still believe that with the support of the TLS, as well as relatively modest funding, part of the company can be saved. However, these developments have significantly reduced our optionality.”
Highveld ceased production on July 20 last year and pursued, together with it unions, a TLS agreement under the auspices of the Commission for Conciliation, Mediation and Arbitration as an alternative to proposed retrenchments.
Trade union Solidarity, which stated previously that Highveld had 2 242 employees, said workers were sent on Wednesday, after the "Unemployment Insurance Fund (UIF) had not fulfilled its promise to pay workers".