Khayah Cement Limited has been placed under corporate rescue to protect it from possible liquidation as the country’s second largest cement producer feels the heat of sanctions placed on certain companies and persons linked to its major shareholder, Fossil Mines (Pvt) Limited.
In a statement on Tuesday, Khayah said it had adopted a resolution to be placed under corporate rescue in terms of the Insolvency Act [Chapter 6:07]. The resolution took effect from December 20, it said, and was “duly filed with the Master of the High Court and the Registrar of Companies and other Business Entities”.
“Creditors and other stakeholders shall be notified of further processes by the corporate rescue practitioner,” Khayah said.
It said Bulisa Phillimon Mbano of Grant Thornton (Zimbabwe) Chartered Accountants was appointed as the corporate rescue practitioner who shall “notify creditors and other stakeholders of further processes”.
A corporate rescue provides a company with an opportunity to restructure its affairs and continue on a solvent business. A corporate rescue shields the company from liquidation, safeguards stakeholders’ interests and enhances the likelihood of the company’s survival.
In 2022, Fossil Mine acquired a 76,45% stake in the then Lafarge Cement Zimbabwe Limited from Associated International Cement Limited, a member of the Holcim Group. Lafarge Cement Zimbabwe Limited was last year later rebranded to Khayah.
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No sooner had Fossil completed the acquisition than the US designated companies and individuals linked to the company.
The United States Office of Foreign Assets Control (OFAC) designated Fossil Agro, Fossil Contracting and Obey Chimuka.
The sanctions handicapped Khayah.
In a cautionary statement on December 29 2022, then Lafarge Cement Zimbabwe said the sanctions placed on certain persons and companies linked to the majority shareholder Fossil Mines (Private) Limited had impacted some processes within Lafarge Cement Zimbabwe and was “considering various courses of action with a view to protecting the business and the interests of all stakeholders”.
“The board and management would like to reassure all stakeholders that measures are being taken to ensure that business operations continue to run smoothly,” it said then.
“The company does not anticipate any disruption in the supply of its much-needed products to the construction and infrastructure sectors of Zimbabwe's economy. The board and management will keep all the relevant stakeholders updated and informed in due course.”