Evraz subsidiary joins parent company in business rescue proceedings

30th April 2015

By: Natalie Greve

Creamer Media Contributing Editor Online

  

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Two weeks after itself filing for business rescue, vertically integrated steel and vanadium slag producer Evraz Highveld Steel & Vanadium announced on Thursday that subsidiary Mapochs Mine would also enter business rescue proceedings following “historical operational difficulties” that had rendered the Limpopo-based iron-ore mine unable to meet its short-term obligations.

As Highveld’s integrated steelworks facility was Mapoch’s primary customer, Highveld’s filing for business rescue placed in doubt Mapochs’ ability to source funding that it had historically obtained from its parent company.

Moreover, the iron-ore business had suffered the effect of an “onerous” supply agreement with Vanchem Vanadium.

“The board of Mapochs believes that the implementation of voluntary business rescue proceedings will afford the business rescue practitioners the opportunity to consider the continued implementation of the operational turnaround plan already applied to Mapochs and successfully re-establish its operations,” Evraz said in a statement.

The board of Mapochs said it had appointed John Evans and John Lightfoot as its joint business rescue practitioners and advised shareholders to exercise caution when dealing
in Highveld’s securities.

Engineering News Online reported earlier this month that Evraz Highveld had initiated voluntary business rescue proceedings, 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.

The company said in an update on Thursday that it had met with the business rescue practitioners on Wednesday and would meet with creditors of the company on Thursday.

Mazars business rescue services director Daniel Terblanche and Matuson & Associates director Piers Marsden had been appointed as joint business rescue practitioners to oversee the Evraz Highveld proceedings.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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