Evraz Highveld Steel and Vanadium creditors to decide on the fate of the company

A vote in support of IRL’s bid would ensure long terms sustainability of company

The creditors of Evraz Highveld Steel and Vanadium will, on Tuesday, October 13, vote on the company’s Business Rescue Plan, which has recommended Hong Kong based major metals company, International Resources Limited (IRL) as the successful bidder intending to purchase the asset.

The plan seeks to restore the solvency and liquidity of the company and ensure its long term sustainability. With the continued support of government and organised labour, the practitioners believe that the company will emerge from business rescue as a sustainable contributor to the local community and the country in general.

Speaking at a stakeholder meeting at Highveld’s operations in eMalahleni on Thursday, October 8, the joint business rescue practitioner Piers Marsden said:

“We urge creditors to consider the IRL offer as it provides the best outcome for all stakeholders including creditors, shareholders, employees, suppliers and the community as a whole. IRL has extensive experience in the steel, vanadium and titanium industry. Importantly we are currently negotiating with IRL the right of last refusal for creditors on future supply to Highveld. We firmly believe that accepting their offer is undoubtedly the best outcome as it will ensure the long term sustainability of this crucial business in South Africa’s steel value chain.

He added:

“In the event that the conditions precedent of the IRL bid are not met, the business rescue plan provides for a controlled wind down which still achieves a better outcome than liquidation. The alternative to accepting the business rescue plan would most likely result in liquidation. This is the worst case scenario as it would have far reaching negative ramifications for the majority of the company’s stakeholders.”

The key impacts of liquidation include:

• Termination of business for suppliers

• Dividend, if any, will only be received once liquidation process is completed. This process could take
two years to complete

• Low possibility for plant to start up again

• The potential SARS claim would become a preferent claim to other creditors resulting in a lower dividend

• All employees immediately lose their jobs and receive no severance packages