A new application to put diversified miner RioZim Ltd under corporate rescue has been lodged with the High Court, with a shareholder alleging the group is technically insolvent and “financially distressed”.
The court bid, filed in the Commercial Division of the High Court on Tuesday last week, seeks to place the listed entity under the supervision of a corporate rescue practitioner to prevent its total collapse.
This prompted a move by the shareholder to block the company’s extraordinary general meeting (EGM) scheduled for Wednesday.
The shareholder petitioned the Zimbabwe Stock Exchange (ZSE) and the Securities and Exchange Commission of Zimbabwe to intervene and stop the meeting, which is intended to seek shareholder approval for the disposal of key assets.
The shareholder argues that since the corporate rescue application has been lodged, the company is effectively under corporate rescue proceedings, and the EGM should be suspended.
The fresh application comes in the wake of a failed attempt by the Zimbabwe Allied and Mining Workers Union, alongside two employees, whose application for rescue proceedings suffered a setback after it was struck off the roll.
The latest application is driven by a catastrophic decline in the company’s financial health, the shareholder argues.
As of June 30, 2025, RioZim’s total liabilities stood at ZiG4,15 billion against assets of ZiG2,95 billion.
This represents a negative equity gap of about ZiG1,2 billion.
“The auditors expressed significant doubt that the company can continue trading over the foreseeable future due to its worsening financial situation,” according to the court papers.
The applicant argues that the company’s current market capitalisation of just US$3,6 million is eclipsed by its massive debt profile.
This includes US$5,5 million in unpaid public and contractual obligations and US$4,7 million owed to the Zimbabwe Electricity Transmission and Distribution Company (ZETDC).
The application paints a grim picture of the group’s operational status. A technical report included in the filing reveals that most of the company’s strategic mining assets have ceased active production.
Its gold assets, Cam and Motor, Dalny Mine and One-Step (Cricket) are all under care and maintenance.
Maranatha Chrome and Empress Nickel are listed as inactive. Significant claims of base metals remain undeveloped despite their potential.
The only consistent performers remain the Renco gold mine in Masvingo and the Murowa diamond mine in Mberengwa.
Critical to the application are allegations of “unacceptable and unconscionable conduct” by the board.
The shareholder claims the majority shareholding — approximately 84 percent — is controlled by the family of the late Harpal Singh Randhawa.
This concentration, he argues, has allowed the board to bypass minority shareholders and engage in “unlawful transactions”, and permit the majority interest to bypass 1 646 minority shareholders.
“This allows the (controlling) family to exclude minority shareholders from participating in the company’s important decision-making,” the affidavit reads.
Furthermore, the board is accused of failing to disclose the forfeiture of the Sengwa Mine thermal project.
The project, which was touted as having the potential to generate 2 800 megawatts of power, was reportedly repossessed by the Government — a development the applicant says should have been communicated via a cautionary statement to the ZSE.
The applicant argues that the EGM should be legally barred from proceeding, claiming its proposed resolutions violate the Insolvency Act.
Specifically, the shareholder contends that the EGM seeks to authorise asset disposals that are prohibited under the general moratorium triggered by the corporate rescue filing.
According to the court papers, several resolutions on the agenda involve the “unlawful” disposal of assets that may have already been sold without prior shareholder approval.
The applicant alleges that the directors misled investors by seeking authorisation for transactions, such as the One-Step gold claim sale, which appear to have been concluded previously.
These actions have reportedly drawn the scrutiny of the Zimbabwe Anti-Corruption Commission (ZACC) following a criminal complaint filed in June 2025.
The application also highlights a contentious resolution regarding a US$60,8 million debt owed to RMZ Murowa, a related party.
The applicant claims this resolution has faced stiff opposition from RMZ Murowa’s own creditors, who fear the move could weaken that company’s balance sheet to the point of liquidation.
Furthermore, the shareholder describes the EGM as a “desperate attempt” to regularise unauthorised transactions that favour a few controlling shareholders at the expense of the minority.
Under the Insolvency Act, the company is also barred from securing new loan facilities using its assets as collateral while the corporate rescue proceedings are active, further complicating the board’s proposed agenda.
In a letter addressed to ZSE chief executive Mr Justin Bgoni through their lawyers, the shareholder argued that the meeting must be immediately suspended as the company is now effectively under corporate rescue proceedings.
The lawyers cited a landmark Supreme Court precedent, noting that the mere filing of a rescue application triggers a “temporary moratorium” to protect the company’s assets.
“The law requires the protection of the troubled company’s assets so that corporate rescue practitioners do not inherit shells,” the lawyers stated, quoting Chief Justice Luke Malaba.
They further alleged that the EGM is a “desperate attempt” to regularise unlawful transactions carried out by directors without requisite shareholder approval.
To navigate the crisis, the applicant is seeking the appointment of an independent rescue practitioner to implement a restructuring plan.
Key proposals include unbundling of the group to create four autonomous units — RioGold, RioBase Metals, RioChrome and RioEnergy — to improve focus and efficiency; raising post-commencement finance or engaging financially resourced technical partners; and conducting a transparent valuation of non-current assets to replace subjective valuations by the directors.
The application notes that corporate rescue is a progressive mechanism aimed at reviving strategic national assets rather than liquidating them.
If successful, the move will trigger a moratorium on all legal proceedings and creditor claims against RioZim, providing the company with “breathing room” to restructure.-herald
