Government’s funding agency- CEDA - has skilfully manoeuvred its way to reclaim the majority shareholding of the country’s only steel plant - Pula Steel.
Had this not happened, the plant would have gone under the hammer together with its former parent company -BCL- when the latter was placed under provisional liquidation. Not only has CEDA taken control of Pula Steel, but it has appointed an audit firm, Grant Thornton to appoint qualified personnel to executive management as well as to do status records with the aim of reporting any wrongdoing to the law enforcements agencies.
The appointment of Grant Thornton to probe Pula Steel is the second following the appointment of another audit firm, Pricewaterhouse Botswana, to investigate BCL investment into the company by Minerals Development Company Botswana (MDCB).
The multimillion Pula plant has never operated since the shareholders invested in it. It was hoped it would start production after dilution of the BCL shares following a new capital call.
The shareholders set the date for production of the much in demand billets for 1st February 2017, but that was postponed to ensure the atmosphere was conducive for production including paying the employees outstanding salaries for December and January. Last week the plant employees decided to take the law into their hands by locking their CEO and Investor, Ranvir Kumar Verma inside the plant as they demanded to be paid their salaries as well as the removal of the Verma family from key managerial positions.
The situation calmed down after the intervention of Thabo Thamane, the chief executive of CEDA who assured them that they’d receive their dues as investors have injected new capital. Botswana Guardian investigation has established that the latest capital call of the Pula Steel which saw all the shareholders, except for BCL, injecting capital in order to save the company from collapsing, elevated CEDA to the majority shareholding at 49 percent after they bought equity. This automatically diluted BCL from 64.5 to 22 percent shareholding. Other shareholders are the Verma family and a citizen-owned company, Wealth Generation who own 23.5 and 5.5 percent respectively.
BG News has it on good authority that although BCL was represented at the board meeting when capital call was made, its representative, Nigel Dixon- Warren, who is the provisional liquidator, could not commit BCL as he does not have the mandate to either sell or buy on behalf of the company. It is said that the total capitalisation of Pula Steel is P29 million, and when CEDA bought equity, they did not only become the majority shareholder, but they took control and proposed to other shareholders that a management company should be appointed at Pula Steel.
BG News has learnt that CEDA has appointed a local audit firm, Grant Thornton which started last December. The first assignment of the latter was to do status records, meaning that the audit firm was mandated to scrutinise every document to ensure that all is in order. Part of the conditions that CEDA has set is that should Grant Thornton’s findings reveal any transgression when they scrutinise Pula Steel, then CEDA will refer such infractions to law enforcement agencies such as DCEC and others. CEDA has also proposed that Thornton should help to find suitable personnel for the positions of CEO, Chief Financial Officer and Technical Manager for Pula Steel.
BG News has established that the meeting that the CEDA did not attend led to their shares being diluted to 5.5 percent as they had not injected any capital. The same meeting led to BCL majority shares increasing to 64.5 percent, while Verma family went high to 23.5 percent with Wealth Generations staying at 6.5 percent.
BCL provisional liquidator, Nigel Warren- Dixon could not say much save that, “I am aware of what is taking place at the Pula Steel board because I sit there in my official capacity as provisional liquidator representing BCL. But, I am unable to discuss because Pula Steel is a private company and discussing such matters with other parties will be a breach of my duties in accordance with the Company’s Act.” The CEO of CEDA Thabo Thamane could not be drawn into much discussion but confirmed that Pula Steel will turn around and CEDA is committed to ensuring that jobs are protected and even more will be created as the plant operates.