Border Timbers moves to exit judicial management

Border Timbers is set to exit judicial management after having fulfilled conditions necessary for the company’s exit and the decision was announced at an extra-ordinary general meeting of shareholders held last week.

The company has been under judicial management since March 2016 after it failed to service debts to several financial institutions worth US$20 million and was subsequently suspended from trading on the Zimbabwe Stock Exchange (ZSE) in November 2018.

At the time of going under judicial management, BTL liabilities consisted mainly of deferred tax of US$30 million arising primarily from the biological assets, while borrowings were in excess of US$20 million.

The company’s US$6 million debt to FBC Bank, NMBZ and Ecobank was in November 2015 absorbed by the Zimbabwe Asset Management Corporation (Zamco), a special purpose vehicle created by the Reserve Bank of Zimbabwe in August 2014 to absorb nonperforming loans in the banking sector.

At the company’s EGM held on 12 January 2022, shareholders approved the settlement agreement in relation to the apportionment of the International Centre for the Settlement of Investment Disputes (“ICSID”) and the appointment of directors for purposes of compliance with the requirements of the Companies and Other Business Entities Act [Chapter 24:31] to enable the Company to exit from judicial management.

“The Final Judicial Manager of the Company, presently Peter Lewis Bailey, and the Company’s Directors post-judicial management, are hereby authorised to do any and all such things as be generally required or necessary and exercise all powers to give effect to the Resolutions,” the company said.

Over the years, Border Timbers and the VP claimants had failed to reach an agreement on how to split the US$125 million awarded to them by the ICSID over the land that was expropriated by the Government in 2005.

Following the expropriation of the land, Border Timbers associates filed a request for Arbitration with the International Centre for the Settlement of Investment Disputes (“ICSID”) against the Government under the investment treaty between Switzerland and Zimbabwe.

Claims were also brought against the Government in separate arbitral proceedings by the Company’s (then) majority shareholder, the von Pezold Family (“the VP Claimants”) under the same bilateral investment treaty as well as under a bilateral treaty between Germany and Zimbabwe.

However, disagreements between the two claimants had delayed the company’s exit from judicial management as well as engagement with the Government.

According to BTL, the pre and post award interest relating to that compensation shall be split in the percentages of 57,5 percent to Border Timbers and 42,5 percent to the VP Claimants respectively.

In monetary terms, this means Border Timbers shall be entitled to US$71 million while the VP Claimants shall be entitled to US$52 million.

During the company’s first quarter period ended September 30, 2021, the company said focus was being placed at replacing some of the obsolete equipment, which is expected to improve efficiency.

In the period, the company’s production volume rose 15 percent to 15,723 cubic metres from 13,668 cubic metres in the comparative period last year. Lumber volumes improved to 11,578 cubic metres from 11,539 cubic metres in the same period last year. PolesTransmission volumes nearly doubled to 4,145 cubic meters.

Sales volumes climbed 4,21 percent to 17,411 cubic metres from 16,707 cubic metres in Q1 Lumber sales volumes were down 12,34 percent from 13,933 cubic meters in Q1 2020 to 12,213 cubic metres. Pole-transmission sales volumes increased to 5,198 cubic metres from 2,775 cubic metres.

Inflation adjusted revenue surged 47,53 percent to $462,01 million from $313,14 million in Q1 2020. In the same vein, it recorded an inflation adjusted profit of $101,2 million.

The company continues to focus on strengthening its balance sheet and profitability by improving its biological assets and the related value chains, he added.

Border Timbers, the largest kiln dried lumber in Zimbabwe is an established Zimbabwean forest company with three operational divisions -forestry, saw-milling and manufacturing — with 20 002ha under plantation across five estates in Zimbabwe’s Eastern Highlands.-eBusiness Weekly