24 Nov 2019

Failure to generate sufficient revenues to meet operational expenses resulted in the liquidation of Pula Steel Casting and Manufactures (PTY) Ltd.

Responding to a question in Parliament on Friday, the Minister of Investment, Trade and Industry, Ms Peggy Serame said the plant started operating in February 2015, amid severe working capital challenges which resulted in the plant operating at sub-optimal levels.

“The project was initially envisaged to cost P42.4 million with the capacity of 80 tonnes of billets per day,” she said.

She said despite shareholders’ efforts to restructure financing to bring the project back on track, the plant ultimately closed its operations on May 2017, while the Liquidator was appointed by the High Court on February 2018.

She said the Liquidator approached the Master of the High Court on 2nd July 2019.

“The master of the high court approved that rather than go through a public auction, the liquidators should proceed by negotiating with parties who have previously shown firm interest and have the financial capacity to complete the transaction,” she said.

Ms Serame further stated that Pula Steel was initially conceived by a consortium of investors as a steel manufacturing plant in Selebi Phikwe in a bid to curb the high volume of steel imports in the country as well as meet the excess demand of steel products by regional market.

She told Parliament that a creditors’ meeting was held on 6th August where the Liquidator gave an update and requested the creditors to vote on the sale of the plant and equipment.

She said following a series of consultative meeting with creditors, the liquidator, therefore, recommended that the creditors approve the sale of the plant and they unanimously voted for one company.

“The liquidator has therefore given the buyer the up to November 25, 2019, to have shown the capability to pay the balance with the buy expected to have paid such balance by end of January 2020,” he said.

Minister Serame was responding to a question by Selebi Phikwe West MP, Mr Dithapelo Keorapetse who had asked for an update on Pula Steel Liquidation and prospects for reopening.

Mr Keorapetse contended that the process to liquidate Pula steel had taken too long, and had been shrouded in secrecy as there were allegations of impropriety as things were not done in accordance with corporate governance ethos. ENDS