Evraz drops challenge as creditors accept Highveld mine rescue plan

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Highveld, SA's secondlargest steel maker, is in separate business-rescue proceedings and has shut down operations "temporarily". It said on Tuesday, 2 December, the Mapochs vote on Monday meant the mine had avoided liquidation and remained in business.

The announcement initially drew a hostile response from Highveld's London-based parent company, Evraz, which is seeking to have Highveld's businessrescue plan annulled.

But Evraz acknowledged yesterday evening that it had been advised that a revised plan was proposed in the Mapochs business rescue practitioners' answering affidavit to its court application.

"These amendments addressed the concerns we raised in our application and we are of the view that Highveld and its affected persons are no longer prejudiced by the transaction set out in the plan. We also understand that the revised plan was proposed to the Mapochs creditors and subsequently adopted."

In addition to serial court actions against Highveld in recent months, Evraz launched an urgent application in the High Court in Pretoria on Friday to interdict the proposed Mapochs business-rescue plan.

"The interdict was brought in order to prevent an unauthorised transaction proposed in the Mapochs Mine business-rescue plan, which could be extremely prejudicial to Evraz Highveld Steel & Vanadium and all its affected parties," Evraz had said earlier yesterday before its concerns were allayed.

Evraz had said it had "serious concerns" about the proposal that Highveld - "itself in business rescue" - should acquire all of the creditors' claims in Mapochs for R53m.

"Evraz regards it as highly suspect that Highveld, in business rescue, would provide financing to rescue another company. There is no mention of this in the Highveld business-rescue plan, or of any mandate for the Highveld business-rescue practitioners to secure this funding, or to enter into the purchase of Mapochs creditors' claims, as contemplated in the Mapochs plan," it said.

"In addition, the Mapochs plan currently proposes that Highveld waives any entitlement to any dividend or distribution from the business-rescue plan for Mapochs, essentially waiving what appears to be a claim in the region of an additional R55m."

This would leave the company without the incomegenerating assets, but with increased debts, Evraz said.

In its JSE announcement yesterday, Highveld said: "The plan provides for ... the purchase of creditors' claims, excluding the claims of Highveld and employees, against Mapochs by Hong Kong-based major metals company International Resources Project, also the successful bidder (for) Highveld."

The mine supplies Highveld with vanadium-bearing ore and is 74-owned by the steel maker. It is seen by Highveld creditors as critical to the company's own business-rescue proceedings.

Meanwhile, Highveld's creditors have accepted a R350m offer by International Resources Project to buy about R1.2bn of the company's debt in two tranches. Other potential liabilities relating to the steel maker could reach R1bn, including for environmental clean-up costs and taxation matters.

Business-rescue practitioners for Highveld said yesterday that Evraz had removed its urgent application from the court roll as the urgency had been attended to by amendments to the Mapochs business-rescue plan.

"Their urgent court application sought to interdict the meeting of affected parties of Mapochs Mine to vote on the adoption of the Mapochs business-rescue plan," Piers Marsden, a joint business-rescue practitioner from Matuson & Associates, said.

Source: Business Day