Border Timbers’ dispute with creditors over US$25m awarded to the company by the International Centre for Settlement of Investment Disputes (ICSID) is holding back its exit from judicial management.
Peter Bailey was appointed judicial manager of the agro-concern in 2016 after the company had failed to settle its debts to financial institutions.
Bailey told Business Times this week the company had returned to profitability and is ready to get out of judicial management, but sharp differences on the allocation of the sizeable amount have become a stumbling block.
Protracted negotiation on the distribution is, according to Bailey, yet to yield fruits.
“The differences are on how the award will be split between Border Timbers and other parties, once it’s done then the company exits judicial management,’” Bailey said, adding the two groupings are demanding the highest possible value.
“Obviously, one party, like the other, wants as much as they can get.”
Border was awarded US$25m in addition to interest plus legal costs by an ICSID tribunal over its land which was seized by government under the land reform exercise.
Although the award is final and binding, Bailey said, there is currently no clarity around government’s timetable for settlement and how the award will be shared between the company and the other claimants, thereby delaying the exit of the company from judicial
Bailey said the business outlook remained positive despite minor setbacks from Cyclone Idai and the current economic challenges that are hampering industry and brought uncertainty.
“The Cyclone was just a small dip which is easy to recover from, and people have done extremely well in terms of managing the company,” he said.
In a trading update released last week, Bailey said electricity supply has been restored to all operations in areas affected by the cyclone.
“The major challenge to the business going forward is the rehabilitation of the road’s infrastructure linking the Chimanimani operations to markets, the effect of which will be greatly felt if the permanent fixes are not done before the rains commence fully in six
months-time. We hope that through the intervention of local authorities this will be given priority,” Bailey said.
In the nine months to March 31, Border Timbers’ revenue grew to ZWLS$20,7 million, up from ZWL$15,7 million same period prior year driven by better lumber sales.
Net profit grew to ZWL$3,5m from ZWLS$3,1m in the prior period.
Production volumes closed the period at 52,9 cubic metres, down from 65,7 cubic metres. Sales volumes dipped to 10,9 cubic metres from 12,9 cubic metres in the prior period.