Tuesday, September 29, 2020

Pula Steel Plant buyer remains a top secret

By Victor Baatweng

Silence is not always golden. At least this according to one of the creditors of Pula Steel Casting and Manufacturers (Pty) Limited – Deepak Verma who is also a former shareholder of the company.

Verma first broke his silence on the liquidation of Pula Steel during an interview with the Sunday Standard in October 2018. This was also around the same time at which a process of selling a plant belonging to the liquidated Pula Steel Limited was initiated.

At the time, a South African company – WH Auctioneers was handpicked to manage the process on behalf of the liquidator ÔÇô John Hinchliffe Consultants.

However, the process to identify the ultimate buyer of the Plant seems to be going at a snail’s pace. It has been over six months since the process began and almost a year since both the Master of the High Court and creditors approved the process.

The slow pace, and behind the doors deals, has left Verma and his family frustrated given their interest in the plant and intentions to revive the steel manufacturing company in Selebi Phikwe ÔÇô now known as the ghost town.

In early March 2019, the Pula Steel liquidator ,John Hinchliffe Consultants, told the Sunday Standard that three companies submitted bids which were compliant with the tender requirements of which they were considered in the evaluation process.

“In the evaluation process a preferred bidder was selected. The selection process was impartial and objective with initial assessments carried out by an independent third party in accordance with an agreed criteria. The bidder was selected on the basis of compliance requirements, price and what would be in the best interests of the body of creditors”, John Hinchliffe said in March 2019.

The Sunday Standard has been informed that a former top banker ÔÇô sponsored by one of the leading local financial institutions (name known to this publication) was the preferred bidder.

Efforts to get the liquidator to pronounce the name of the company public hit a snag in early March 2019 as Hinchliffe indicated that he was not in a position to do so.

The decision to keep the name of the successful bidder a top secret has however left Verma even more frustrated.

“As a creditor till date, I have not been informed if there is a taker of the Pula Steel, what processes were taken into account, how many bidders were there”, Verma said.

At the same time, Verma revealed that he also bid for the plant unsuccessfully.

“It is over a month that he had informed the unsuccessful bidders but has not disclosed reason why they were unsuccessful and who is the winner and how many bids were actually received”, Verma said in late March 2019.

In response to the Sunday Standard, Hinchliffe said he is unable to announce the name of the bidder and the value of their bid.

“We are currently unable to announce the name of the bidder and the value of their bid for the following reasons: Non-disclosure agreements with the bidder are still in force and therefore prevent such announcement. If the bidding is to be re-opened for any reason, such information may prejudice the process” Hinchliffe said in response to questions from the Sunday Standard.

Pula Steel Casting and Manufacturers (Pty) Limited will in the future be counted amongst the biggest financial loss that has occurred in Botswana over the past recent years.

The company was envisaged as the messiah to the economy of the town of Selebi Phikwe and surrounding villages given what was seen as an imminent closure of the copper nickel mine owned by BCL Limited.

STILL-BORN DEALINGS AND MISLEADING DEALS

From 2012 when the Pula Steel plant was set up until around 2014 when a new board of directors for the company was constituted all seemed like a bed of roses. Things however reportedly turned ugly in October 2016 when – BCL Limited was placed under provisional liquidation. Before liquidation, BCL Limited had a majority stake of 50.5 percent while another state owned entity CEDA held 26 percent followed by the Verma family with 17 percent.

Fast forward to October 2017, Pula Steel itself was placed under provisional liquidation following the internal bickering at the board caused mainly by the fight for the BCL Limited stake. Before the provisional liquidation, CEDA, which at the time was a majority shareholder moved to place Pula Steel under judiciary management.

The local unit of the global Accounting and Auditing giant – Grant Thornton was subsequently assigned to look at the financial books of the company. Grant Thornton was later appointed by CEDA as an independent financial management company but later converted and confirmed to a Judiciary Management company within a span of 20 days and paid P1.2 million for the latter appointment which was allegedly made up of only three sites visits to the Pula Steel plant.

The downfall of the company has been linked to the still-born dealings and misleading deals that happened both in public and behind closed doors.

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The Telegraph September 30

Digital edition of The Telegraph, September 30, 2020.