ZCCM Investments Holdings says it would be offering stock to its existing shareholders for sale in a bid to raise funds to pay off its debt and seek opportunities in new developments.
ZCCM IH is an investment company owned by the Zambian government with an 87.6% stake while private equity investors hold a 12.4% stake.
In a statement, ZCCM-IH said it would use a portion of the funds to reduce its USD 379 million debt it owed to the government of Zambia.
The company said this huge debt has suppressed the value of the company and made the company unattractive to investors and the market.
The balance sheet of ZCCM-IH for the year ended 31 March 2012 carried total liabilities of K2, 352 million against total assets of K2, 302 million resulting in a negative book value of K50.5 million.
The bulk of the liabilities constitute debt owed to the GRZ carried over from ZCCM.
The company said the GRZ indebtedness has severely constrained its balance sheet in the recent past and that this has affected valuation of the Company by the market and limited the capacity of Management to unlock value for the benefit of shareholders.
“Taking into account the high volatility associated with copper prices, the unpredictability of dividends from investee companies, and other related factors that impinge on the revenues of the Company, the Board of Directors of ZCCM-IH believes that it is imperative that the balance sheet of ZCCM-IH be restructured as a matter of urgency and that priority be the reduction or elimination of the current debt burden,” the statement read.
“In so doing, the Company will be put on a sustainable trajectory going forward and thus will maximise shareholder value.”
The company said in order to implement the Strategic Plan and achieve its critical objectives, the Board has recommended that the Company should immediately undertake a Share Rights Offer to all shareholders.
A Rights Offer is an offer made to existing shareholders of a company to subscribe for new shares on a pro rata basis.
It is a common mechanism for raising a large quantum of capital relative to existing market capitalization, particularly where shareholders do not wish to be diluted.
The company hopes the rights offer would de-gear its balance sheet by expunging GRZ debt of K1, 998 million (approximately US$ 363 million) and thereby unlock the value of the company for the benefit of all shareholders.
It said the rights offer would ensure ZCCM-IH remains financially solvent and able to continue as a going concern.
ZCCM-IH has minority shares in Mopani, KCM, Kansanshi and a host of other mining and related companies.
The Company has a primary listing on the Lusaka Stock Exchange Zambia and currently has non active secondary listing on the London Stock Exchange and some shares are traded on the Euronext stock exchange in Paris.
ZCCM-IH is the privatized entity formerly known as Zambia Consolidated Copper Mines Limited.
In 2000 ZCCM was privatized by the Government of Zambia.
ZCCM-IH emerged from the privatization of ZCCM as an investments holdings company with equity stakes of between 10 to 20.6% in the new companies that were formed from the unbundling of ZCCM.
Is anything ever successful in Zambia. I am beginning to wonder.
There can be if we create an enabling and investor attractive environment. ZANACO is one successful example that was achieved under Mwanawasa/Mangande reign. It is just that we have rewound to our failed past under pf. Some of these spent leaders want recreate the past. The world, however has changed and they just need to realize that.
@Numbian, yes something are successful…. for example:
– Mikaeli Sata is a success, from a Police constable to address UN Assembly on behalf on Zambian.
– Kabimba succeeding despite all Zambians disliking him- the power of dictatorship is successful.
You can add yourself, that is Zambia = The Real Africa!!
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ZCCM, Zambia Airways, Zamtel ,Zambia railways…..is there anything zambians can run profitably and actually grow the entity or are we a nation which only knows how to wreck?
yes there is.
its just that we love living beyond our means.
you should just look at the way these guys running zccm – ih live, for you to make an informed decision.
these guys from zccm were corrupted by those ‘free incentives’ they had under the kaunda regime and want to maintain the same even today, at the expense of service delivery.
just look at the way they have run down nkana water and sewerage…..
Amen. One of the only few people that know the real truth about ZCCM and its history. ZCCM IH was the remnant of the most corrupt entity in Zambia’s history.
Maybe not a bad idea to list it.I like it.
A private company with such a high government share holding cannot attract investor confidence. These are the remnants of our failed socialist past.
ZCCM is already listed and traded since 1970 on the Paris Stock Exchange :
http://www.bloomberg.com/quote/MLZAM:FP
But it is not normal that the GRZ ZCCM asked to repay debts that were canceled (Paris Club)
The insolvency of ZCCM IH should serve as a warning to pf that revival of failed parastatals such as Zambia Railways, Zambia Airways and NCZ should be approached with caution and tact in this now highly globalized world market. If not, we may face a worse collapse of the economy than what happened in the 1980s.
insolvency is a world problem.
How? I thought that they had a clause allowing them to gain from copper price increases – thought that was why the directors were living large. kanshi kongole!
its one thing listing but another to have the listed investment company be covered by research analysts weather paid or client paid.Most of our entities just list and never get covered to excite investors to invest in their resources.
you see we also need to build out own plat form from which we can trade and speculate on the resources we have in minerals.Like the current germstone mines.
Its a valacy that vendetta resources through kcm is marking money on the resources on the KDMP and recently the sale with option value by one exploration company owning uranian resources in southern/central provice.
Then to excite investors with real options .ZCCM IH needs to have what is real “excited and…
So nothing should be done about? This is dustbin kind of reasoning.
Something better should be done and that is to increase the private equity share holding and reduce GRZ shareholding to less than 40%. In this way the listing on the stock market will attract serious buyers.
ZCCM is already listed and traded since 1970 on the Paris Stock Exchange
IT IS NOT!!!!!!! What is listed on LUSE is ZCCM-IH wamvela?????
ZCCM-IH on Paris Stock Exchange : bloomberg.com/quote/MLZAM:FP
good sites of fields of resources nicely natured to be marketed and actually marketed to private wealthy venturist normally who develops and disventure to make a profit. A private placement of interests would raise more many that the prospects being advanced but then only then if the green fields have been marketed but looking at the share price movements,there is no one pumping up the prices for ZCCM IH resulting in its huge resources in share prices being under valued.You simply don’t list but also pay analysts if your are not attractive to cover your investments on listed and excite the investors as to your green fields.
Really the chiefs challenge is to have these investments covered to attract investments
Zccm IH is held by the most learned people in Our country mostly Educated by ZCCM.Y IS IT THE CASE?
NO!!!! Only by THIEVES!!!!
The problem is entrust assets and money in people who only know spending better than income generation, and we have a lot of them. Theirs is spend, spend and spend with no notion of how what they are spending was acquired. We need to teach people how to make money and how to save it for future reinvestment and use. These guys with bottomless pockets only know that they need to make money when they become broke. All that capital at ZCCM IH and after such long time only to start begging!
Parastatals do not work anywhere in the world. Government has nothing to do in business. Invariably politics comes in and spoils the broth.
Close ZSIC and ZCCM -IH. Both are parasites and drain on national resources.
Directors interested in allowances, getting bribes from garages, and theft through contracts.
Both are insolvent and will never ever be viable. Stop putting good money after bad money.
Zccm ih should reveal what assets they have locally and abroad . Company should tap into external shareholders. Government share should be reduced to between 50-55 percent.
simply check on vendetta resources and take a leaf or the company was following mawson resources and apply to zccm
check vendetta resources or mawson resources and learn a lesson to apply to ZCCM/IH
Trying to raise more funds to narrow extra budgetary shortfall created by the Government in pursuit of by-elections?
Privatise ZCCM-IH
Privatise Zamtel
Privatise Railways (Tazara included)
Privatise Indeni
Privatise Zesco
Privatise Zsic
Privatise Tazama
and use the money to finish President’s house and for by elections
ZCCM-IH must increase it’s stakes in the mines at-least 49% owe every mine that was privatized or a 50-50 (win win) situation where Foreign Private investors and government run things together, which also means that profits will be shared equally; and hence finance government spending and through a proper efficient taxation system. It’s about having a concrete fiscal policy in place that will stimulate and make possible rapid economic growth. Government must be the pioneer and engineer of it all. Empower 50-50, I call it, The Inter-Zambia FDI partnership. What we see today where private investors run things their own way including tax evasion is unacceptable. International Thinking Systems ITS must be branded and planted in every Zambian in Zambia including how they do business. IAAG
ZCCM-IH must increase its stakes in the mines at-least 49% owe every mine that was privatized or a 50-50 (win win) situation where Foreign Private investors and government run things together, which also means that profits will be shared equally; and hence finance government spending and through a proper efficient taxation system. It’s about having a concrete fiscal policy in place that will stimulate and make possible rapid economic growth. Government must be the pioneer and engineer of it all. Empower 50-50, I call it, The Inter-Zambia FDI partnership. What we see today where private investors run things their own way including tax evasion is unacceptable. International Thinking Systems ITS must be branded and planted in every Zambian in Zambia including how they do business. IAABG
It is a bit odd that a mare short-term slow-down in Copper price increase, in a market where we know nothing is rock-steady, is now characterised as ‘highly volatile’. Anyone with interest in world copper demand is aware that the long-term outlook is bright. The alternative renewable energy sources that are taking root are even more copper intensive than the traditional methods. Honestly, are we expected to believe that this ‘volatility’, i.e. this small ripple, in a Copper graph whose average is still steadily rising north-east is the main cause of insolvency? Or are these guys playing the blame game i.e. blame it on ‘volatility’?
That’s why you have hedge funds and funds of funds to tap in.To me as I see drom 21 is purely understanding the resources that ZCCM/IH holds on behalf of the Zambian Gov and learn from the way Caledonia explorations has reaped massive gains in lumwana and kansanshi and recently kalumbila.
See vendetta trading Gold and Uranium resources and there share price rising even before they venture seriously.Simply right marketing sale side reports detailing these green fields to world reknown resource traders on well supported trading platforms supported by paid and research analyst posting analytics and reports attracting investments in shares and ventures as a source of capital and selling right when…
Two much stakes in old and slow mines Invest and sell your stake when shares are high or place cetain share holding as collateral in one of the mines and invest the proceeds to restructure your balance sheet as it where.It might be quicker and easier to raise funds sell also the risks of your environmental cleanup to institutions and insurance companies and let them be traded like carbon units up and down as it where we have seen certain innovation.Its a huge cost saving on your financials.
Restructure also certain share holdings in non performing mines heading down the road
ZCCM-IH is not involvent and this so-called $370 million recapitalisation is not necessary… indeed ZCCM-IH could recover $1 billion ($570 million kept by First Quantum Mineral, $300m mis.appropriated by Mopani/Glencore, $100 million swindled, etc)
Who is benefeting from this sc.am ? Why do the govt and the management of zccm be so lenient with lo.oters ???
Iwe berett Zambia Railways was privitised but what happened? The system has been wrecked down now needing government to resurrect it. We can’t privitize everything 100%. We only need partial privatization.
What do you expect with corrupt, dull Chairman Wila Mungomba? This is a one term president of Africa Development Bank. And even there he did not score any major successes. Then just go on to read about Capital Bank and anything else he has ever run. The man can’t even ‘run’ a race. But he was rewarded by Michael for his miserly donations to PF.
zccm should give miners benefits that were acrued during kcm.At the exit of kcm or rather anglo american miners were supposed to b given benefits but zccm has held on to that money until todate.
can someone with info shed light on my comment.
ZCCM IS NOT INSOLVENT!
Journalistic deficiency is a worldwide problem.
What this ” journalist ” says may be compared to :
” I’m insolvent because i have an on-going loan of 100.000 $ on my house, but my annual revenues are only 30.000 $, and i have only repaid 15.000 € to date.”
Dumb, and dumber.
Zccm has revenues and is profitable by itself. But it is supposed to repay enough of its debt so that the debt amount is under the valuation of its assets before paying dividend. I do not see the problem.
Zambians should be proud of Zccm.
Mungomba and his cronies at ZCCM-IH are mismanaging big way. What happened to proceeds the company realised on divesting its stake in Lumwana?
ACC shall move in.
Zambians have failed again.
right portrait
He usually enjoyes his life to the optimum in his gilded old people’s home ZCCM-IH.
From time to time, he participates in conference and shows in order to brag out, make grandiose speeches and take photos with personnalities.
A lot of talk but obvious mismanagement…
Mung’omba undermines the PF credibility
It is very simple.
Intransparancy => Corruption => Tax Evasion and Revenue Obfuscation by Miners
How on earth can a holding company become insolvent? What is their overhead?
This is a government owned holding company. They need to start opening the books, before they even issue a single new share. Issuing shares only dilutes the value of existing shareholders.
ZCCM-IH shouldn’t be ‘insolvent’, it should be bringing in hundreds of millions of dollars every year, at least.
Most Seniors (i mean old people) do not have new ideas. I feel Mungomba has old mentality and can not do business in morden environment. He still thinks ‘Parastatal’. They spend and spend and spend with no sense of revenue generation. Retire this Mungomba and you will see how he will ‘finish’ in a period of just 3 months (the guy will feel like fish out of water because he has no idea how to generate revenue). Boards should be given fixed term of say 2 three year terms to bring out innovation.
What the company has not said, is extent of the financial risk posed by such a high gearing ratio, with GRZ being the biggest lender. One would think that the company is enjoying a huge relief in form of tax shield on interest payments which will be lost in the event that the rights issue goes ahead, thus vindicating GRZ debt finance as a cheaper source of finance. The government should oppose this move as ZCCM HI will be at liberty not to pay any dividends as is the case with interest payment on the loan which mandatory. ZCCM HI should just settle the debt.
Looks like a scum to swindle the government further as the debt is already a scum!