Tata Steel prepares to sell

TATA Steel KZN is preparing to sell its Richards Bay ferrochrome plant after a five-year financial battle.

This was announced by business rescue practitioner Les Matuson of Johannesburg-based company Matuson & Associates at the first meeting of creditors held at the ZCBF Community Hall on Monday.

An accelerated sales process was initiated by Tata Steel KZN prior to their announcement of a business rescue in terms of the Companies Act, and will be crucial in determining the success of the procedure.

Matuson said he was aware of several interested and credible prospective purchasers currently involved in the process.

The business rescue commenced on 8 July and Matuson was appointed on 13 July.

The procedure aims to facilitate the rehabilitation of the ‘financially distressed company’ by providing for temporary supervision and management of its affairs, business and property by the appointed practitioner.

It also involves a temporary moratorium on claims against the company and its property.

The practitioner is required to develop and submit a business rescue plan, published within 25 days of being appointed.

Matuson however said he will be asking for an extension of the stipulated period for a reasonable and limited period, to present a plan to creditors once there is more certainty about the possible sale and the way forward.

The plan, which could include restructuring of Tata Steel KZN’s business, property, debt, affairs, liabilities and equity, should ideally be drafted only when the outcome of negotiations are known.

The creditors were provided with an outline of the company’s current financial state and were invited to sign up as part of a creditors committee.

Electricity hikes of over 70 percent, the depreciating Rand and a reduction in ferrochrome prices have been identified as the largest contributing factors in the company’s five-year struggle.

The plant is currently not operating and is on a care and maintenance programme, with all staff currently being paid.

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