Attention: All Affected Persons of Hernic Ferrochrome Proprietary Limited (in business rescue)

Transcription

1 Hernic Ferrochrome (Pty) Ltd R/E of Ptn 103 De Kroon 444 JQ P.O. Box 4534 Brits 0250 South Africa Attention: All Affected Persons of Hernic Ferrochrome Proprietary Limited (in business rescue) Dear Sir / Madam 31 May 2018 NOTICE TO THE AFFECTED PERSONS OF HERNIC FERROCHROME PROPRIETARY LIMITED (IN BUSINESS RESCUE) ("THE COMPANY") IN TERMS OF SECTION 132(3)(b) OF THE COMPANIES ACT 71 OF 2008 Attached hereto is a copy of the progress report in relation to the business rescue proceedings of the Company for May Yours faithfully Peter van den Steen Trevor Murgatroyd tel fax Reg. No. 1994/008293/07 NON EXECUTIVE DIRECTORS: R Havenstein (Chairman) Y Doida* AC Fourie S Nakahara* R Karstel *Japanese

2 Companies and Intellectual Property Commission Republic of South Africa Form CoR Business Rescue Status Report About this Form This form is issued in terms of section 132 and 141 of the companies Act, 2008, and Regulation 125 of the Companies Regulations, This Notice and the attached report must be published to every affected person, and to- a) The Commission, if the business rescue proceedings were started by the company; or b) The court, if the proceedings were ordered by the court. 31 May 2018 Date: MURGAT01 Customer Code: Concerning (Name and Registration Number of Company) Hernic Ferrochrome Proprietary Limited Name: Registration No: The above named company commenced business rescue proceedings on 21 September /008293/07. Because the business rescue proceedings have not concluded within three months, the appointed business rescue practitioner provides the attached report in terms of section 132 (3). A report and Notice must be issued at the end of the first three months of the business rescue proceedings, and at regular monthly intervals after that Contacting the Commission The Companies and Intellectual Property Commission of South Africa Postal Address PO Box 429 Pretoria 0001 Republic of South Africa Tel: Name and Title of person signing on behalf of the Practitioner: Ryan Smith - Attorney for joint business rescue practitioners Authorised Signature: This form is prescribed by the Minister of Trade and Industry in terms of section 223 of the Companies Act, 2008 (Act No. 71 of 2008).

3 _1.docx Hernic Ferrochrome Proprietary Limited (in business rescue) with registration number 1994/008293/07 (the "Company") Business Rescue Status Report in terms of Section 132(3) of the Companies Act 71 of 2008 ("the Act") 1. Introduction This report is for the month of May 2018 and is published as an update to the business rescue status report for the month of April 2018 published to affected persons and filed with the Companies and Intellectual Property Commission. 2. Implementation of the Adopted Business Rescue Plan 2.1 The adopted business rescue plan is being implemented in accordance with the terms thereof. 2.2 All of the condition precedents of the Sale of Business Agreement (as referenced in paragraph of the adopted business rescue plan) are being progressed. 2.3 We set out below an update on certain of the conditions precedent: Standard Bank Standard Bank has provided the necessary consent in terms of this condition precedent and Samancor has waived and/or confirmed the condition precedent has been fulfilled; Section 11 Application The section 11 application is in the process of being finalised and it is hoped to be submitted to the Department of Mineral Resources by mid- June 2018 for the relevant Ministerial consent; and Competition Application The competition application is in the process of being finalised and it is hoped to be submitted to the South African Competition Authorities by

4 mid-june 2018 for approval. The foreign competition filings will follow thereafter Fatality 3.1 It is with regret and great sadness that we report that a Winch Operator, an employee of Kumbula Trading was fatally injured in a winch related accident at Morula Shaft on Monday 23 April The incident took place at around 13h15 during the day shift around the 2-28B MG2 panel on Morula Shaft. 3.2 The Department of Mineral Resources and the Company have investigated the possible causes of the incident and remedial actions have been implemented. 4. Production 4.1 The current stability of furnaces ensured production levels well above budget. The Company achieved an all-time monthly production record of t for the month of May The performance of the furnaces is well above design capacity. The Company is focusing on the supply of raw materials to sustain the current furnace throughput. 4.3 The Company will take part in the Eskom incentive program to consume more electricity. The Company will therefore produce slightly more ferro-chrome during the winter months. 5. Market Conditions 5.1 Market conditions have deteriorated due to the stronger Rand against the US Dollar as well as the envisaged reduction in FeCr prices into Europe and China over the next few months. 5.2 The winter months are traditionally tough months for the Company due to the increased cost of electricity. The Company typically uses the winter months to do scheduled maintenance on the furnaces. That results in reduced electricity consumption but at the same time reduces production output. 5.3 Market research and forecasts currently indicate that despite heavy losses that will be incurred over the winter moths the Company is in a position to weather the storm. The Company's financial position is monitored continuously by the BRPs and management.

5 3 6. Local Community Engagement The Company has recently experienced some community demonstrations relating to demands for employment and business opportunities. This resulted in Bokone Opencast not being able to blast for two days. The Alloys division was able to operate normally even though there was a protest march by the local community to the plant. Regular meetings have been scheduled with leadership from different communities surrounding the Company in an effort to avert possible future protest action, as a continuance of such protest action could result in unintended adverse consequences for the Company. 7. General 7.1 To date, undisputed amounts due to suppliers to the Company and amounts due to employees continue to be paid in the ordinary course, as and when payments have fallen due. The shareholders loan claims remain subject to the moratorium. 7.2 The Company continues to produce and operate in the ordinary course. SIGNED AT JOHANNESBURG THIS 31 st DAY OF MAY 2018 Peter van den Steen Trevor Murgatroyd