News / National
Telecel denies corporate rescue proceedings
24 May 2023 at 01:02hrs | Views
EMBATTLED telco, Telecel Zimbabwe (Pvt) Ltd (Telecel) has dismissed its placement under "corporate rescue proceedings" first announced in a notice in the Government Gazette dated May 12, 2023.
The Government Gazette published a Notice of Beginning of Corporate Rescue Proceedings of Telecel in terms of section 124(2)(b) of the Insolvency Act.
Telecel shareholders, employees and creditors were notified that a court application for the placement of the company under supervision was filed with the High Court of Zimbabwe on October 10, 2022.
The court application was made by Communication and Allied Service Workers Union of Zimbabwe.
Thus, the notice was issued in terms of the court filing to state that corporate rescue proceedings had commenced in terms of section 124(2)(b) of the Insolvency Act.
However, in a statement yesterday, Telecel board chairperson James Makamba dismissed the notice as nothing, but a legal nullity.
"It is noted by the board with extreme concern that a gazetted notice was published on Friday May 12, 2023 to the effect that corporate rescue proceedings had validly commenced. This is not accurate or true. Telecel Zimbabwe (Pvt) Ltd wishes to assure the public, stakeholders, creditors and all interested Telecel persons that it continues to provide its services as normal," Makamba said.
"An invalid legal process by the Communication and Allied Workers Union of Zimbabwe was lodged in the High Court of Zimbabwe under HC 306/22 in October 2022 through Gumbo & Associates. That application was opposed. The outcome of those proceedings awaits a set down date to determine the validity and the merits. The notice as published in the Gazette is considered a legal nullity."
He called the notice "belated" as it tried to sanitise procedural defects raised in opposition by the company's lawyers, Honey and Blanckenberg.
"All interested stakeholders, including the public, our customers and creditors, are assured that there is no valid basis to assert that Telecel is unable to discharge payments of any valid debt or is incapable of discharging its service provisions to the public, beyond the normal constraints exerted by the current tough operating environment," Makamba said.
Corporate rescue refers to proceedings to facilitate the rehabilitation of a company that is financially distressed.
This is done by providing for:
"(i) the temporary supervision of the company, and of the management of its affairs, business and property; and (ii) a temporary moratorium on the rights of claimants against the company or in respect of property in its possession: and (iii) the development and implementation, if approved, of a plan to rescue the company by restructuring its affairs, business, property, debt and other liabilities, and equity in a manner that maximises the likelihood of the company continuing in existence on a solvent basis or, if it is not possible for the company to so continue in existence, results in a better return for the company's creditors or shareholders than would result from the immediate liquidation of the company."
One of the biggest challenges for Telecel, as has been the case with fellow telco competitors NetOne and Econet Zimbabwe, has been paying for its network and infrastructure maintenance.
The biggest supplier of these network services are Chinese telecom conglomerates Huawei Technologies Co Limited and ZTE Corporation as well as Swedish telecom multinational firm, Ericsson.
"The board and stakeholders of Telecel shall continue providing its services professionally and are currently seized with advanced plans to inject fresh capital into the organisation as it enters a new exciting phase of sustainable growth," Makamba said.
In February 2022, as first reported in our sister paper, Zimbabwe Independent, rumours started circulating that the firm was struggling.
Telecel's difficulties led government to partially privatise the telco.
The Government Gazette published a Notice of Beginning of Corporate Rescue Proceedings of Telecel in terms of section 124(2)(b) of the Insolvency Act.
Telecel shareholders, employees and creditors were notified that a court application for the placement of the company under supervision was filed with the High Court of Zimbabwe on October 10, 2022.
The court application was made by Communication and Allied Service Workers Union of Zimbabwe.
Thus, the notice was issued in terms of the court filing to state that corporate rescue proceedings had commenced in terms of section 124(2)(b) of the Insolvency Act.
However, in a statement yesterday, Telecel board chairperson James Makamba dismissed the notice as nothing, but a legal nullity.
"It is noted by the board with extreme concern that a gazetted notice was published on Friday May 12, 2023 to the effect that corporate rescue proceedings had validly commenced. This is not accurate or true. Telecel Zimbabwe (Pvt) Ltd wishes to assure the public, stakeholders, creditors and all interested Telecel persons that it continues to provide its services as normal," Makamba said.
"An invalid legal process by the Communication and Allied Workers Union of Zimbabwe was lodged in the High Court of Zimbabwe under HC 306/22 in October 2022 through Gumbo & Associates. That application was opposed. The outcome of those proceedings awaits a set down date to determine the validity and the merits. The notice as published in the Gazette is considered a legal nullity."
He called the notice "belated" as it tried to sanitise procedural defects raised in opposition by the company's lawyers, Honey and Blanckenberg.
"All interested stakeholders, including the public, our customers and creditors, are assured that there is no valid basis to assert that Telecel is unable to discharge payments of any valid debt or is incapable of discharging its service provisions to the public, beyond the normal constraints exerted by the current tough operating environment," Makamba said.
Corporate rescue refers to proceedings to facilitate the rehabilitation of a company that is financially distressed.
This is done by providing for:
"(i) the temporary supervision of the company, and of the management of its affairs, business and property; and (ii) a temporary moratorium on the rights of claimants against the company or in respect of property in its possession: and (iii) the development and implementation, if approved, of a plan to rescue the company by restructuring its affairs, business, property, debt and other liabilities, and equity in a manner that maximises the likelihood of the company continuing in existence on a solvent basis or, if it is not possible for the company to so continue in existence, results in a better return for the company's creditors or shareholders than would result from the immediate liquidation of the company."
One of the biggest challenges for Telecel, as has been the case with fellow telco competitors NetOne and Econet Zimbabwe, has been paying for its network and infrastructure maintenance.
The biggest supplier of these network services are Chinese telecom conglomerates Huawei Technologies Co Limited and ZTE Corporation as well as Swedish telecom multinational firm, Ericsson.
"The board and stakeholders of Telecel shall continue providing its services professionally and are currently seized with advanced plans to inject fresh capital into the organisation as it enters a new exciting phase of sustainable growth," Makamba said.
In February 2022, as first reported in our sister paper, Zimbabwe Independent, rumours started circulating that the firm was struggling.
Telecel's difficulties led government to partially privatise the telco.
Source - newsday
