RCC placed under rescue plan… Company hints at challenging decision in court
Desie Heita Windhoek-Confusion reigned supreme yesterday regarding the future of the Roads Contractor Company (RCC), but it has since emerged that a plan has been set in motion to place the loss-making entity under a court-supervised rescue arrangement. This exercise, approved by Cabinet on Tuesday, would wind up the RCC in the form it is known today and possibly result in a new, similar but efficient entity. The Cabinet resolution is now set for urgent tabling as a motion before parliament. If parliament endorses the decision, public enterprise minister Leon Jooste would have to approach the High Court for an application to have RCC placed under judicial management. In legal terms judicial management is applied to allow a company in dire financial straits, but which is still a viable business, the opportunity for rehabilitation and restoration to profitability. The judicial manager for RCC would be empowered to make far-reaching decisions on the company’s business transactions, to include operations, human resources and financial management. Judicial management’s main effect, lawyer Norman Tjombe explained yesterday, is to place a moratorium on debt payments. Another effect is that a manager is appointed who must oversee the business of the company. The plan is to birth a new RCC that operates as a commercial entity under the Ministry of Public Enterprises, and not the Ministry of Works and Transport as is currently the case. The public enterprises ministry would approve the strategic plan, sale of properties and oversee the business direction of the new RCC. “We have some good mitigating plans,” said Jooste of the rescue plan the ministry has for the company. New Era can however reveal that the RCC board and senior executives were all shell-shocked yesterday when Jooste broke the news of the Cabinet resolution to them at midday. The RCC leadership is said to be mulling over the possibility of approaching the courts to challenge the application to put RCC under judicial management, something that is likely to pitch government, as shareholder, against the board, who are the legal custodians of RCC. Nevertheless, Jooste was yesterday bullish about Cabinet’s decision on RCC, telling New Era: “We have put up mitigating measures to help the workers in the meantime and protect the company.” He said part of the Cabinet resolution brings much needed relief to the 398 workers who as of yesterday were still not paid their monthly wages. Cabinet on Monday placed RCC workers on the payroll of the Treasury, with the directive that the workers be immediately paid their outstanding salaries. “There is no immediate impact, it is even better now for workers, they are going to get their salaries on time,” said Jooste, adding: “There is no reason for anyone to panic. For all intents and purposes, it is business as usual [at RCC].” Nevertheless, the board feel there is no need for a court-appointed rescue plan for RCC, because a turnaround business plan already exists, which Jooste has rejected and Treasury has refused to fund. Jooste said Cabinet had the option of putting RCC into straight liquidation, thus closing shop, but made a conscious decision to rather have the RCC placed under judicial management. The minister said the RCC “was enabled by means of human resources, equipment and preferential access to road maintenance and road construction to support the road network and generate profit for the state”. “Unfortunately things did not turn out that way and RCC has year-on-year since its establishment in 2000 posted financial losses. The value of RCC’s liabilities exceeds the value of its assets,” he said. “Given the seriousness of the current financial situation at the RCC and limited availability of state resources to assist any of the ailing commercial public enterprises the Cabinet Committee on Overall Policy and Priorities [which is chaired by President Geingob] decided to seek placement of the RCC under judicial management,” he explained. Jooste assured that “creditors need not panic either – the judicial management would restructure the debt”. While the company is under judicial management, creditors would have to wait to see their claims against the company settled. “The judicial manager will pro-actively seek ways to restructure the debt of the company and respond to financial demands on the company,” said Jooste.
2017-09-08 09:42:24 1 years ago