Hwange chairman Mr Farai Mutamangira said the deal collapsed after the two failed to agree on key issues.
"After consultation with major shareholders and failure to break the deadlock on the issue of management control, and also having regard to the costs of the funds, the company was unable to progress with this offer further," said Mr Mutamangira in a letter to shareholders dated
Cognisant of the need to take drastic measures to save
The turnaround plan to be presented to major shareholders seeks to address concerns on non-commercial activities in the company, restructuring of executive management by resizing senior management positions and bring on board a chief operating officer to strengthen management;
The board also resolved to cut 50 percent of current staff and reduce the wage bill by 50 percent.
According to the plan, the company will be restructured into six operating divisions as follows;
The objective is to ensure that these divisions are profitable as units and that they raise capital on the basis of their own balance sheets.
The pricing of Hwange Power Stations coal will be revised to commercial levels of about
Balance sheet restructuring will be carried out to convert
The Government as a major shareholder has been approached to consider the conversion of debt to equity.
Under this structure, shareholders have the option of swapping debt for equity or making direct cash injections.
On operations, the company is troubled by legacy debts amounting to about
"With increased production the company will be in a good position to clear legacy debts and quickly return to profitability.
"While the legacy debt has weighed down the performance of the company, clearly the debt will be cleared with improved production performance premised on acquisition of new mining equipment," he said.
The company has also come under increased competition from Makomo Resources, Coal Brick and Chilota Colliery. This competition has eaten into the market share of
However, the coal miner sees production increasing to between 450 000 and 500 000 tonnes, boosted by contract capacity.
Hwange awarded Mota-Engil of
The contractor will produce 200 000 tonnes of coal per month. This will assure
At this level, and assuming costs are contained below
Going forward, company will require as much as
The coal reserves of
The views of the Government regarding the future of Hwange are to be carefully considered and common positions found, said Mr Mutamangira.
"The Company's long term capitalisation strategy will be anchored on securing significant debt and/or equity injection in the estimated sum of
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