Home » News » Business » South African company promises hand of steel at Pula Steel

South African company promises hand of steel at Pula Steel

Publishing Date : 12 August, 2019


Creditors, liquidator and auctioneer found bid from South African company DH Machine Manufacturing for the Pula Steel plant hard to resist because it initially complied with the offer requirements document and made the highest bid of P21 million while its competitor was trailing by P7 million.

South African auctioneer WH Auctioneers was tasked by Pula Steel liquidator John Hinchliffe to handle the sale of the plant. WH Auctioneers adjudicated two companies Botswana bound Wealth Key Trading and South African based DH Machine Manufacturing.“Based on the fact that DH Machine Manufacturing was in full compliance with the offer requirements document and made the highest bid, we recommend that DH Machine Manufacturing offer be accepted, subject to receipt of payment of the balance of the offer,” WH Auctioneers Director Prelena Narainsamy recommended DH Machine to the Pula Steel liquidation in a letter leaked to BusinessPost.

In a letter written to the creditors this week, Pula Steel liquidator Hinchliffe heeded WH Auctioneers’ recommendation further stating that he gave DH the plant because it has “intent  on investing further in Botswana and will create significant employment in the country over the next few years if their plans come to fruition.” Hinchliffe further said the offer also compares reasonable well to a valuation which was carried out in August 2018 in which the assets DH has offered to purchase were valued at approximately P29 million in total.

“Given the passage of time which could have resulted in further deterioration of the assets and the ongoing poor economic environment in Selibe Phikwe, I believe a 10 percent discounting of the original valuation is reasonable.  I am therefore, as Liquidator, also recommending to the creditors that the assets be sold to DH. I believe this will be in the best interest of the creditors, “said Hinchliffe in a communication to the creditors.

According to requirement of the Sale of Pula Steel Plant, the Seller has the right to reject any offer and may choose entirely at his own discretion not to accept any offer for any reason. Also the Seller will be under no obligation to provide reasons for his non-acceptance of any offer. The awarding of the tender for DH came after a failed attempt to have the Pula Steel Plant sold. The tender process failed due to inability of the preferred bidder to pay within stipulated time periods.

The liquidator and the Master of High Court then agreed that the tender which was issued in October 2018 be canceled. Then interested parties who have both expressed interest and have financial capacity would be invited to submit offers under a private treaty arrangement (i.e this is not a public/open tender but is available only to the selected parties).

After failure of the first sale Hinchliffe and the Master of High Court also agreed that the assets for sale would include the rolling mill assets which were previously excluded from the tender due to a claim of reservation of title by the supplier. WH Auctioneers was tasked with selling the plant on behalf of the liquidator. This week the creditors, bidders and the auctioneers met for a decisive event at the Court of Appeal where it was decided that DH should own the Pula Steel plant as many saw it as “economically sound and the best interest of the creditors.”

The Pula Steel assets comprises of, Plant and Buildings, plant and machinery at the main site valued at P18 181 818.18. The rolling mill components are at P3 000 000 .00. The whole plant cost at P21 181 818.18. WH Auctioneers were also paid P2 118 181.81 as commission. The gross bid excluding tax is P23 299 999. 99 and when the 12 percent VAT is included the whole amount payable becomes P26 095 999.15.



Do you think the courts will help put the UDC, BMD impasse within reasonable time ahead of the 2019 General Election?