Telecel Zimbabwe rescue plan lists debts to Mutapa, POTRAZ and suppliers
Telecel Zimbabwe rescue plan lists debts to Mutapa, POTRAZ and suppliers
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A corporate rescue plan for Telecel Zimbabwe has set out the mobile operator’s main debts and proposed how creditors and shareholders could be paid if a recapitalisation deal is approved.
The plan, prepared by Grant Thornton Zimbabwe, comes as Telecel’s creditors and shareholders are expected to vote on whether to accept or reject the proposal. If adopted, several historical obligations would be settled at reduced rates, while some statutory and employee obligations would be paid in full.
According to the rescue plan figures, Telecel’s largest obligation is shareholder loans of about US$97.7 million owed to its majority shareholder, the Mutapa Investment Fund. Under the proposed settlement terms, Mutapa would receive about seven cents for every dollar owed, translating to a cash settlement of around US$6.8 million.
Telecel also has licence fee arrears of about US$40.2 million owed to the Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ). The proposal indicates the historic arrears would similarly be compromised to seven cents in the dollar, implying a payment of about US$2.8 million.
The plan also refers to a separate US$54.8 million tied to future licence years, which would not be reduced, and would be paid over eight years with the first year as a grace period.
Among equipment suppliers, Huawei is listed as being owed US$14.7 million, split into a secured claim of US$10.7 million relating to network equipment supplied between 2010 and 2012, and an unsecured balance of US$4 million. The proposal states both parts would be settled at 40 cents in the dollar, amounting to about US$5.9 million.
ZTE is listed as being owed about US$8.5 million, also to be compromised at 40 cents in the dollar, which would result in about US$3.4 million being paid.
Trade creditors, covering various suppliers, are listed at about US$9.8 million, to be settled at 40 cents in the dollar, or roughly US$4 million.
The plan further lists about US$691,000 owed to government bodies such as ZIMRA for taxes, NSSA and other pension-related funds. These statutory obligations, the proposal indicates, would be paid in full.
Outstanding employee salaries are put at about US$257,000, with the plan indicating these arrears would also be paid in full.
On the shareholding side, the proposal provides nominal consideration for existing equity. Mutapa would receive US$1 for its 60% stake, while Empowerment Corporation would receive 50 cents for its 40% stake, according to the figures in the rescue plan summary.
The document outlines a clear payment hierarchy under the proposal: employees and statutory bodies are prioritised for full payment; suppliers and equipment partners face a partial compromise; and the largest compromises fall on the regulator’s historic licence arrears and the government shareholder loans.
Creditors and shareholders are expected to weigh the recapitalisation offer against the prospect of liquidation, which the plan suggests could result in lower recoveries for most parties. The proposal indicates Telecel could return to profitability within two years if the plan is implemented.
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