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Hwange Colliery Company Limited - Notice To Creditors Convening The Scheme Meeting In The High Court Of Zimbabwe Case No. Hc 5012/17 Held At Harar

Release Date: 31/03/2017 16:30:00      Code(s): HWA     
In The High Court Of Zimbabwe Case No. Hc 5012/17 Held At Harar

Hwange Colliery Company Limited
HWANGE COLLIERY COMPANY LIMITED
(Incorporated in Zimbabwe under registration number 381/1954)
ZSE Share Code: HCCLISIN: ZW0009011934
JSE Share Code: HWA ISIN: ZW0009011934
LSE Share Code: HWA ISIN: ZW0009011934

NOTICE TO CREDITORS CONVENING THE SCHEME MEETING

IN THE HIGH COURT OF ZIMBABWE CASE NO. HC 5012/17

HELD AT HARARE

In the matter of the Ex Parte Application of-

HWANGE COLLERY COMPANY LIMITED Applicant

Application for leave to convene a scheme meeting in terms of section 191 of the Companies Act
(Chapter 24:03)

NOTICE OF SCHEME MEETING

NOTICE IS HEREBY GIVEN THAT, in terms of an Order of Court dated 1st June 2016 (?the Court
Order?) in the above matter, the High Court of Zimbabwe sitting at Harare (?the Court?) has ordered in
accordance with the provisions of section 191 of the Companies Act (Chapter 24:03) (as amended)
(?the Companies Act? or ?the Act?), that Scheme meetings (?the Scheme Meeting?) of the Secured
Creditors (?Secured Creditors?) and Unsecured Creditors of the Applicant (?the Unsecured Creditors ?)
be convened under the chairmanship of Andrew Lawson for the purpose of considering and, if
deemed fit, agreeing to, with or without modification, the scheme of arrangement (?the Scheme?)
proposed by Applicant with its Secured Creditors and Unsecured Creditors as follows:

PLEASE NOTICE THAT the Scheme Meeting shall take place in the Conference Room at Chapman
Golf Club, 1 Henry Chapman Road, Eastlea, Harare, Zimbabwe on Wednesday 26th April 2017,
in respect of the concurrent creditors at 10:00 hours.

The purpose of the Scheme Meeting is to consider and, if deemed fit, to agree (with or without
modification) to the Scheme, the basic characteristics of which are contained in the scheme document
which can be obtained from any one of the Applicant?s three offices namely:

1. 7th Floor Coal House, 17 Nelson Mandela Avenue, Harare;
2. 95 Robert Mugabe Way, Bulawayo; and
3. General Office, Number 1 Coronation Drive, Hwange

A copy of the explanatory statement in terms of section 192(1) of the Act explaining the Scheme, the
scheme document, this notice convening the Scheme Meeting, the form of proxy and the Order of
Court convening the Scheme Meeting may, on request by any Creditor, during normal working hours
be inspected at or obtained free of charge from the registered office of the Applicant at 7th Floor Coal
House, 17 Nelson Mandela Avenue, Harare.

Each Creditor is entitled to attend, speak and to vote at the respective Scheme Meeting and is entitled
to appoint one or more proxies to attend, speak and vote in his/her stead. The necessary form of
proxy is attached to and forms part of this document. Additional forms of proxy may be obtained on
request from the Applicant?s registered office as set out above.

Each signed form of proxy must be lodged with or sent to Applicant care of MawereSibanda
Commercial Lawyers of 10th Floor, Chiedza House, Cnr 1st Street and K Nkrumah Avenue, Harare to
be received by not later than 12:00 noon hours on 21st April 2017 or handed to the Chairperson of
the Scheme Meeting not later than ten (10) minutes before the time for which the Scheme Meeting is
convened. Those creditors who previously submitted proxies need not resubmit.
The Chairperson of the Scheme Meeting will report the results thereof to the above Honourable Court
at 10:00 am or so soon thereafter as Counsel may be heard, on Wednesday, 10th May 2017. A copy
of such report will be available (free of charge) at the Chairperson?s offices at C/o Ralph Bomment
Greenacre & Reynolds, 3rd Floor, 301 Building Number 2, Long Chen Plaza Office Complex, Mutley
Bend/Samora Machel Avenue, Harare, Zimbabwe from 4th May 2017.

Andrew Lawson
Chairperson of the Scheme Meeting

Harare
31 March 2017

Sponsor: Sasfin Capital (a division of Sasfin Bank Limited)


EXPLANATORY STATEMENT OF THE SCHEME

Proposed Solvent Scheme of Arrangement between Hwange Colliery Company Limited (the
"Company") and its Scheme Creditors

To: Scheme Creditors

1. IMPORTANT NOTICE

This letter constitutes an explanatory statement pursuant to section 192(1) of the Companies Act
[Chapter 24:03]. The contents of this summary should not be construed as legal, tax, financial or other
professional advice. You should consult your own professional advisers as to any legal, tax or
financial implications or other matters relevant to the action you should take in connection with the
Scheme.

2. INTRODUCTION AND BACKGROUND

2.1 We are writing to you about the solvent scheme of arrangement (the "Scheme") which the
Company proposes to enter into with its Scheme Creditors pursuant to section 191 of the Companies
Act.
2.2 The purpose of this letter is to:
a) provide background information in relation to the Company and its business which is the subject of
the Scheme;
b) explain the advantages and disadvantages of the Scheme;
c) explain the main provisions of the Scheme; and
d) explain certain procedural matters and the proposed timetable in order to assist Scheme Creditors
to reach an informed decision on whether to vote in favour of the Scheme at the forthcoming Scheme
Creditors' Meeting.

2.3 This letter has been sent to you as the Company's records indicate that you are, may be, or may
represent a Scheme Creditor in respect of a Scheme Liability and you may therefore be entitled to
vote on the proposed Scheme at the Scheme Creditors' Meeting convened for the purpose of
considering and, if thought fit, agreeing the Scheme (the "Scheme Creditors' Meeting"). However,
receipt of this letter does not necessarily mean that you are a Scheme Creditor and are therefore
affected by the Scheme.

3. WHAT IS BEING PROPOSED?

Hwange Colliery Company Limited is proposing a scheme of arrangement between itself and its
concurrent creditors (the concurrent Creditors? Scheme).

4. WHAT IS A SCHEME OF ARRANGEMENT AND HOW DOES IT AFFECT THE COMPANY'S
CREDITORS?
4.1 A scheme of arrangement, such as that proposed here, is an arrangement provided for by statute
between a company and its creditors, or any one or more classes of creditors. Typically, a scheme
will alter the creditors' rights against the company, so that new rights are substituted for those which
previously existed. Any rights can be altered in this way, whether the alteration is merely minor or is
very substantial.

4.2 Because it alters creditors' rights, a scheme has to be agreed at a meeting of the creditors
concerned or, if the scheme concerns different classes of creditors, at a separate meeting of each of
those classes. For this purpose approval requires, at each meeting, a simple majority in number
representing not less than 75% in value of the creditors (or the class of creditors) present and voting
either in person or by proxy to vote in favour of the scheme.

4.3 If, a scheme is agreed in the manner just described, the Company can apply to the court for the
scheme to be sanctioned. Only if the court makes an order sanctioning the scheme will the scheme
become effective and even then it will not become effective unless and until a copy of the Court Order
is delivered to the Registrar of Companies for registration.

4.4 Once a scheme becomes effective, it is binding on the company and on all of the creditors
concerned. This means that it binds not only those creditors who attended the meeting or meetings
and voted in favour of the scheme but also those who voted against the scheme and those who did
not vote at all, including those who did not even attend or receive notice of the meeting or meetings.
Once a scheme becomes effective, the previously existing rights mentioned above are replaced by
the new altered rights.

5. WHY IS HWANGE COLLIERY COMPANY LIMITED PROPOSING THE SCHEME?

5.1 After having done a due diligence of its business and having reviewed its business strategy the
directors of the company are confident that given some breathing space by creditors and with proper
cost control measures and strict financial management the business can be turned around and settle
all its liabilities to creditors over a few years.

5.2 The company has failed to service its debts mainly due to a combination of factors which include
the following:

i) Slump in global commodity prices;
ii) Mismanagement of its affairs;
iii) Poor cost control;
iv) Undercapitalisation and shortage of critical working capital; and
v) Low production levels due to technical challenges with equipment.

5.3 As a result of failure to service its debts a large number of the company?s creditors have resorted
to litigation to recover what they are owed by the Company. Most of these creditors have obtained
judgments and are seeking to attach the Company?s assets in execution
.
5.4 If the productive assets of the Company are attached and sold in execution, such attachment will
immensely disrupt the finalisation and implementation of the proposed scheme and the Company?s
operations will be grounded, and most creditors will lose out.

5.5 If the scheme is implemented, the Company can operate under the protection afforded by a
scheme of arrangement whilst a turnaround strategy is being implemented so that the Company settle
its obligations.

5.6 It has also been realised that should creditors call up the debts owed to them this will result in
huge losses for both the Company and the creditors as the forced sale value of the assets will most
certainly not realise enough value to offset all the liabilities of the Company. This means that creditors
will have to write-off a huge portion of the debt.

5.7 In light of the foregoing the Company is therefore proposing a scheme to give the Company some
breathing space so that it can continue operating without interruption and at the same time putting in
place a scheme of debt servicing that is inclusive of all the creditors.
5.8 The proposed Scheme, if implemented, will result in Hwange Colliery Company Limited being able
to fully service its liabilities owing to its remaining creditors.

6 WHY IS HWANGE COLLIERY COMPANY LIMITED USING A SCHEME?
The Scheme is a formal procedure under the Companies Act [Chapter 24.03] which is commonly
used to carry out corporate reorganisations.

7 THE SCHEME

7.1 The proposed Scheme of Arrangement will see all creditors being paid whilst the Company is
operating as detailed in the Scheme Document available for creditors at the Company?s registered
offices at 7th Floor, Coal House, Nelson Mandela Avenue, Harare.

7 MECHANICS OF THE SCHEME

8.1 In terms of section 191(1) of the Companies Act, leave must be sought from the High Court to
convene the Creditors? Scheme Meeting. Accordingly, an appropriate application was made to the
High Court for leave to convene the Scheme Meeting. Leave to convene the Scheme Meeting was
granted by the High Court on 1st June 2016.

8.2 The Scheme Meeting was initially set for 14th July 2016 but was postponed by the Chairperson to
a later date to allow the company enough to come up with an acceptable proposal to creditors.

8.3 In terms of section 191(2) of the Companies Act, the Scheme requires the approval, at the
Creditors? Scheme Meetings, of a majority in number representing not less than three-fourths (?) in
value of the votes exercisable by the Scheme Creditors present and voting either in person or by duly
authorised agent or by proxy at the Scheme Meetings. Duly authorised agents of the creditors or their
proxies will be entitled to speak and to vote at the Scheme Meeting.

8.4 Subject to the Scheme being approved by the Creditors at the Scheme Meeting, an application
will be made to the Court for the Court to sanction the Scheme.

8.5 A Court hearing is expected to be held at the High Court at 1000 hours or as soon thereafter as
Counsel may be heard on Wednesday 10th May 2017 unless otherwise advised. Creditors will be
entitled to attend Court on the day on which the application will be made for an order sanctioning the
Scheme, to make representations concerning the sanctioning of the Scheme. Creditors are entitled to
be represented by their duly appointed legal representatives.

8.6 A certified copy of the Court Order sanctioning the Scheme, together with a copy of the Scheme
Document (including this Explanatory Statement) shall be deemed to be the contract required to be
registered with the Registrar in terms of Section 191(3) of the Companies Act. The Scheme shall
become binding upon every Creditor on registration of a certified copy of the Court Order and the
Scheme Document with the Registrar as aforesaid.

8.7 The concurrent creditors, if the Scheme becomes operative, will receive settlement on the agreed
terms and conditions or within such longer period as, the Chairperson, in his opinion, may deem
reasonable.

8.8 The notice convening the Creditors? Scheme Meeting, which is to be held at 1000 hours on
Monday 24th April 2017 in Conference Room at Chapman Golf Club, 1 Henry Chapman Road,
Eastlea, Harare, Zimbabwe attached to and form part of this Circular. Members who are unable to
attend the Scheme Meeting and wish to be represented thereat, should complete the attached Proxy
Form in accordance with the instructions contained there.

8.9 Proxy Forms for the Scheme Meeting must be lodged with MawereSibanda Commercial Lawyers
in accordance with the instructions contained therein, to be received by no later than 12 noon on 21st
April 2017. If a Proxy Form for the Scheme is not received by the appropriate time set out above, it
may be handed to the Chairperson of the Scheme Meeting not less than 10 minutes before the
commencement of the Scheme Meeting.
8.10 Creditors may wish to vote ahead of the Scheme Meeting. They may do so by duly completing
and submitting Proxy Forms, indicating their election (that is, exercising their vote) thereon, in
accordance with the instructions on the Proxy Forms. In that case, such Creditors need not attend the
Scheme Meeting, although they are free to do so if they wish. Their votes, as indicated on the
completed Proxy Form, which, for that purpose, shall constitute their ballot, shall be taken into
account when votes are counted at the Scheme Meeting, unless they attend the Meeting and vote
differently at such Meeting.

8.11 The implementation of the Scheme is subject to the fulfilment of the Conditions Precedent set
out in Paragraph 10 of this Explanatory Statement.

9 UNDERTAKINGS BY THE DIRECTORS

The Directors of Hwange Colliery Company Limited undertake that upon the Scheme becoming
operative they will give effect to the terms and conditions of the Scheme, sign and procure the signing
of all documents and will carry out and procure the carrying out of all acts which are necessary to give
effect to the Scheme.

10 CONDITIONS PRECEDENT

The Scheme is subject to the following Conditions Precedent (?the Conditions Precedent?) being
fulfilled:

10.1 The Scheme being approved by a majority in number of Applicant?s concurrent creditors
representing not less than three-fourths (?) in value of the votes exercisable by the Applicant?s
concurrent creditors present and voting, either in person or by proxy, at the Scheme Meeting;

10.2 The Scheme being sanctioned by the High Court in terms of Section 191 of the Companies Act;

10.3 A certified copy of the order of Court sanctioning the Scheme being registered by the Registrar
of Companies in terms of Section 191 (3) of the Companies Act and

10.4 The obtaining of any necessary regulatory approvals.

11. OPINIONS AND RECOMMENDATIONS

The Directors of Hwange Colliery Company Limited collectively and individually have considered the
terms and conditions of the Scheme and are unanimously of the opinion that they are fair and
reasonable to the creditors of Hwange Colliery Company Limited. The Directors confirm that they
have no material interests in the Scheme. Accordingly, the Directors therefore recommend that the
creditors vote in favour of the Scheme.

Signed at Harare by the Directors
of Hwange Colliery Company
Limited Signed on original by all
directors
DIRECTORS

Date: 31/03/2017 04:30:00 Supplied by www.sharenet.co.za                     
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