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Johannesburg - Evraz’s South African steelmaking unit said one of its lenders is stalling a process to rescue the company from insolvency as the bank refuses to cede control of a debtors’ book.
Evraz Highveld Steel and Vanadium’s [JSE:EHS] business rescue practitioners asked a court to order that Sasfin Holdings' banking business release debtors ceded to it, as this would allow the steel producer to source funding from the Industrial Development Corporation, the company said Monday in a statement.
Sasfin has imposed R36m in penalties after an agreement lapsed when Evraz Highveld requested business protection last month.
READ: Evraz steel unit files for bankruptcy protection
This is in addition to the R35m it has collected from Highveld, funds the bank is retaining. Cathryn Pearman, a spokesperson for Sasfin, could not immediately comment when contacted by phone.
“Highveld disputes that Sasfin is entitled to retain the debtors’ book of Highveld after having collected all the capital and interest outstanding on the facility,” it said. “These actions have severely compromised Highveld’s ability to access the cash flow required to save the business.”
Evraz Highveld applied for bankruptcy protection after metal prices sank, it said last month. South Africa’s steel industry is struggling as spending on infrastructure projects remains low, manufacturing declines and cheaper imports enter the market.
The application to the High Court will be heard May 28, Evraz Highveld said.
