Business / Companies
Firstel Cellular dodges $11m debt
14 Apr 2016 at 02:27hrs | Views
Former NetOne management led by suspended CEO Mr Reward Kangai who owned Firstel Cellular do not want to pay the $11 million that they owe the Government-owned mobile operator after they applied for liquidation of the firm at the High Court.
The former management owned Firstel in their individual capacities.
NetOne and Firstel Cellular entered into a service provider agreement in which Firstel was mandated to find clients for NetOne contract lines and then remit the money collected from the subscribers to the service provider, less its commission.
However, the company did not remit the proceeds resulting in NetOne approaching the courts with the High Court and Supreme Court ruling that Firstel was supposed to pay the mobile operator the debt of about $8,3 million in January last year.
But the debt has since ballooned to about $11 million. Sources said the management was reluctant to pay, arguing that they had failed to collect the money after the introduction of the multi-currency system in 2009 as subscribers failed to settle their bills.
"So, management first approached the board requesting that the debt be written off, but after (the) board declined the request, they approached the High Court applying for liquidation," said a source. "What it effectively means is that the former management wants liquidation so that they do not settle the $11 million debt that they owe NetOne, which is unacceptable."
In an application filed with the High Court, Firstel company secretary, Mr Tamuka Madzore said his company was saddled with a $12 million debt with the bulk of it belonging to NetOne. "The application is being made for the reasons that the applicant is unable to pay its debts," said Mr Madzore.
"The applicant currently has liabilities in the sum of $11 821 056, 93 of which the sum of $11 245 805, 23 is owed to one creditor." "The applicant has failed to pay off these amounts and is no longer in operation as it has closed most of its branches throughout the country, leaving only the head office in Harare.
"Resultantly, the applicant is not able to service its debts. It is for these reasons that the board of directors has resolved that the company be placed under provisional liquidation." Firstel recommended that Regatta Financial Advisory Services be appointed as their provisional liquidator.
Contacted for comment, NetOne board chairperson, Mr Alex Marufu said: "I do not have enough information to be able to comment at this moment." However, at a press conference late last month, Mr Marufu confirmed that Firstel Cellular, owned by the Kangai-led management was the mobile operator's biggest debtor.
The NetOne board last month, suspended several top level managers at the firm following the unravelling of irregularities. They have since ordered a forensic audit to establish the financial damage the company suffered under the leadership of Mr Kangai.
The former management owned Firstel in their individual capacities.
NetOne and Firstel Cellular entered into a service provider agreement in which Firstel was mandated to find clients for NetOne contract lines and then remit the money collected from the subscribers to the service provider, less its commission.
However, the company did not remit the proceeds resulting in NetOne approaching the courts with the High Court and Supreme Court ruling that Firstel was supposed to pay the mobile operator the debt of about $8,3 million in January last year.
But the debt has since ballooned to about $11 million. Sources said the management was reluctant to pay, arguing that they had failed to collect the money after the introduction of the multi-currency system in 2009 as subscribers failed to settle their bills.
In an application filed with the High Court, Firstel company secretary, Mr Tamuka Madzore said his company was saddled with a $12 million debt with the bulk of it belonging to NetOne. "The application is being made for the reasons that the applicant is unable to pay its debts," said Mr Madzore.
"The applicant currently has liabilities in the sum of $11 821 056, 93 of which the sum of $11 245 805, 23 is owed to one creditor." "The applicant has failed to pay off these amounts and is no longer in operation as it has closed most of its branches throughout the country, leaving only the head office in Harare.
"Resultantly, the applicant is not able to service its debts. It is for these reasons that the board of directors has resolved that the company be placed under provisional liquidation." Firstel recommended that Regatta Financial Advisory Services be appointed as their provisional liquidator.
Contacted for comment, NetOne board chairperson, Mr Alex Marufu said: "I do not have enough information to be able to comment at this moment." However, at a press conference late last month, Mr Marufu confirmed that Firstel Cellular, owned by the Kangai-led management was the mobile operator's biggest debtor.
The NetOne board last month, suspended several top level managers at the firm following the unravelling of irregularities. They have since ordered a forensic audit to establish the financial damage the company suffered under the leadership of Mr Kangai.
Source - Herald
