TURNALL Holdings Limited’s balance sheet restructuring deal hangs in the balance, with the manufacturing company having reached an agreement with all its creditors but is still struggling to convince banks to agree to its terms.
BY FIDELITY MHLANGA
Turnall owes its creditors $29 million as both current and non-current liabilities, a situation that is preventing the tile, asbestos and pipe manufacturing entity to look for working capital.
The company announced in April that it was engaged in discussions relating to the restructuring of its balance sheet.
As part of the restructuring exercise, the company was engaging its creditors for a possible debt-to-equity swap.
“Because of our net current liability, we want to restructure some of these debts and move from current to medium or long term,” the company’s acting financial director Samson Mavende said.
“This is what we are doing. We are negotiating with all our creditors. We have reached an agreement with most of our creditors but there is one class of creditors, which is actually the banks.
“With all other creditors we have reached an agreement but what’s left is to agree with the banks on how to restructure the loan.
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“We are now at an advanced stage such that we think we should complete soon. By the end of the year I think we should be done.” Initially the company had indicated an intention to finalise the restructuring exercise by end of August but sticking issues with other creditors stalled the process.
However, the debt restructuring exercise has taken a little longer than anticipated as the company is failing to reach consensus with banks which it owes a combined $7,5 million.
The banks are FBC, BancAbc and CABS.
Mavende said having reached an agreement with the Zimbabwe Revenue Authority (Zimra) to repay $10 million over a long period of time, the company was proposing to repay banks over a six-year period.
“We will be paying in instalments. With Zimra, we have made an arrangement which is also a huge debt. Zimra we owe them $10 million,” he said.
“We have agreed to pay over a long period.
“With the banks, we are negotiating on the terms but we have already agreed in principle to restructure, so the issue left is about the exact terms.
“Our proposal is to repay within a period of six years.”
During the first half of the year ended June 30, the company bemoaned working capital constraints.
Some of the challenges affecting the company’s operations were limited borrowing space, limited terms from key suppliers, legacy debts and low production levels.
Consequently, the company registered a 17% total sales volume decrease to 15,557 tonnes.
Lower current year sales volumes were caused by low carry overstock from the previous year . The firm registered a 12% drop in total turnover to $7,6 million during the period from $8,7 million.
During the first half, the company narrowed its loss from $1,8 million to $297 000.
During the period, more resources were allocated to procurement of raw materials and other inputs (45% vs 29% in the previous year). As funds were directed to raw material procurement, loan repayments were low at $0,08 million compared to $1,10 million prior year. Cash generated from operations was $0,93 million from
$0,60 million with Capex for the period standing at $0,08 million against $0,02 million prior year.
