Sunday, July 5, 2020

200 former Pula Steel employees remain jobless as liquidator fails to find new buyer, again…

Despite nearly two years of legal wrangling over the country’s pioneering steel plant – Pula Steel, efforts to resuscitate it have not yet beard any fruits as the preferred South African buyer –  DH Manufacturers has reportedly  “abandoned” the idea to buy and reopen the Selebi Phikwe based steel manufacturing plant. 

In August 2019 efforts by Deepak Verma – director of Wealth Key (Pty) Limited – the Verma family company which conceptualized the liquidated manufacturing company also hit a snag after Pula Steel creditors, mainly state owned enterprises overwhelmingly voted against Wealth Key (Pty) Limited’s revised offer and sided with the South African firm bid. At the time, the liquidator – John Hinchliffe and the creditors agreed to sell the plant through a private treaty instead of an open public tender process. 

Even before the famous August 6, 2019 creditors meeting, through a letter, the liquidator made it very clear that his preference between the two bidders – Wealth Key (Pty) Limited and – DH Manufacturers was the latter.

“I am therefore, as liquidator also recommending to the creditors that the assets be sold to DH. I believe this will be in the best interests of creditors”, Hinchliffe said in a letter to creditors dated 02 August 2019.

However despite emerging victorious after the 6 August 2019 creditors meeting, the South African firm – DH Manufacturers has however reportedly failed to meet set conditions including paying P21 million that was offered for the Plant. 

This has left the liquidator with no option but to start preparing papers to call for a fresh bid for the plant. 

It is however not clear whether following his humiliation at the hands of creditors in August, Verma will make any bid when the call is finally made. A few weeks after his loss at the August 6 meeting Verma categorically made it clear that he has since lost interest in buying the plant. At the time, Verma said he had enough fighting Pula Steel creditors, mainly state owned entities and that he will going forward refocus his energy and resources towards other opportunities. 

“Our 100 percent guarantee of P15 million was not accepted but a 20percent short deposit was accepted and further being covered on exchange variation. It is clear someone is favouring someone for a reason”, Verma said in mid August 2019 following the creditors meeting with liquidator where his new offer was rejected. 

[By the numbers] 

2012: The year in which the Pulas Steel Plant was commissioned 

2017: Company placed under provisional liquidation  

200: Number of workers who lost their jobs at the time of liquidation 

P53 million: Amount approved by the BCL board (now defunct) as an investment to support construction of the Plant. 

P21 million: Amount offered by DH Manufactures to buy both the Plant and Rolling Mill components. 

P25 million: Amount offered by Wealth Key (Pty) Limited to buy both the Plant and Rolling Mill components. 

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Sunday Standard June 28 – 4 July

Digital copy of Sunday Standard issue of June 28 - 4 July, 2020.