Thursday, October 29, 2020

Corroded Pula Steel fails to attract investors

Beleaguered Pula Steel braces to be stripped and its components auctioned off at a deep discount after it failed to attract investors it has emerged.

Pula Steel, which is the country’s pioneering steel plant in final liquidation is struggling to attract investors with its woes having escalated early this year when one of the potential investors was disqualified after for failure to deliver on its promises.

Pula Steel liquidator, John Hinchliffe, informed creditors that after approving the sale process at a creditors meeting, the successful offeror had failed to meet their commitment to pay the balance of the purchase prices and was therefore disqualified from the sales process and had forfeited their deposit.

“This was after Vermas (Ranvir and Deepak) had delayed the whole process with an application to the High Court to invalidate the creditors meeting at which the process and offer were approved. I also informed creditors that we would work out the forward, obtain approval from the Master and update them periodically of the progress,” said Hinchliffe

He said in conjunction with WH Auctioneers “we came to the conclusion that we should make one more attempt to sell the plant through a bidding process. If there are no successful bidders after that process, we would then to break the plant and sell it off through an on sight public action process.”

He said there was some delay in obtaining approval from the Master as the responsible person for this liquidation in the Master’s office changed in January, Nomsa Moatswi being replaced by Silibaziso Mtunzi.

“I met with Mma Mtunzi in February and she approved the proposed process, “said Hinchliffe.

He said interested parties who have previously shown interest and other potential buyers have been invited to bid and the offer document which outlines the reprocess and the format for the bid has been posted on WH Auctioneers website.

“The offer document was finalized in early April and posted immediately but unfortunately lockdown and borders between Botswana and neighbouring countries were closed.

According to Hinchliffe, due to the inability of interested parties from outside Botswana to view the plant, the deadline for submission of offers has been extended and will continue to be extended until is possible for viewing to take place for those who reside in neighbouring countries and cannot currently enter Botswana. The current deadline for submission is 31st July 2020.

“In addition, now that COVID-19 related restrictions are being relaxed in Botswana, the sale will be advertised locally in newspapers to ascertain the level of local interest. If decent offers are received locally then there may not be a need to extend the deadline further,” Hinchliffe said.

For his part, Deepak Verma said, “For record purposes, I would like to state, the Liquidator cannot find the buyer and he is blaming me and my father for delaying, but the so called potential buyer who did not conclude the sale DH Machine from South Africa was wanted by Hawks and his accounts were seized by hawks in South Africa. So why blame us and miss inform creditors.I would humbly bring to the notice, if the liquidator or the auctioneer cannot sell he cannot shift the blame on us.That way he can also say, because Deepak and Ranvir brought the case against him so DH failed and that is why Covid -19 pandemic happened. Blaming someone is very easy. He had 3 years and he could not find a buyer”

Deepak added that, “I feel pained &I would humble request through  this platform to the liquidator , if u cannot find a buyer then inform.  I further request the creditors, this plant can run, but it needs will and team work. 

If we get together as one, we can start this plant. I further recently informed the liquidator that there is a possible buyer but for a low price with the terms. I believe,the project it is just being derailed by some people who don’t want this project to come live. It has all the elements of success but it needs long term approach and correct decision. I hope liquidator and auctioneer finds a buyer asap. 

According to Verma,  it was the liquidator’s own decision to pursue with DH machines and wanted to convince creditors over the Verma’s bid where he claimed “he has done all due dilligence on Coin-it who was funding DH machine and are the sister concern”. 

Verama rhetorically asked, “If they preferred failed as they were wanted by hawks, how are we responsible for it. Infact we notified it in court on that day that DH machine tools cannot raise funds. We just are being blamed for his own wrong judgement about the business. This looks quite personal as in every report he mentions that we delayed, but he never mentions that the due dilligence failed him not us”. 

The Minister of Investment, Trade and Industry Peggy Serame in February this year informed Parliament that the company that had paid the required deposit of P300 000 for bidding was unable to pay the balance that was set for end of January. 

Therefore, she said, the sale of Pula Steel could not proceed. The Minister revealed that the liquidator had since engaged auctioneers to assist in the disposal of the plant and equipment, following failure to sell the plant. She indicated that the Liquidator had only been able to sell the movable assets of the business and the proceeds were used to meet the expenses of the liquidation.

Through family company known as Wealth Key Trading (Pty) Limited, the Vermas had made an initial bid of P22 million for the Pula Steel assets whilst their only competitor, DH Manufacturing offered P21 million.

The family is part of the initial shareholders of Pula Steel, a company that the Botswana government through the then BCL Limited and the Citizen Entrepreneurial Development Agency (CEDA) invested millions of Pula in its bid to diversify the economy of the now ghostly town of Selebi Phikwe. 

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