Costain relief as Nssa pays US$14m debt

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CONSTAIN Zimbabwe, the local unit of London Stock Exchange-listed construction firm which was taken over by a local consortium, has been given a lifeline after its major debtor, the National Social Security (NSSA) agreed to pay a $14 million debt, the High Court heard on Wednesday.
The company, renamed Ceezed Construction, was placed under provisional judicial management in October 2014  – just over three years after the localisation of ownership – due to financial challenges resulting in the firm failing to meet its obligations and some of its assets being seized.
Ceezed and its sister company CZL Incorporated, were involved in an ‘advanced corporate incest’ according to judicial manager, Wesley Sibanda after management failed to separate the books for the two entities, making it difficult to recover debts worth $19 million.
Sibanda told creditors on Wednesday that he had successfully applied to the High Court to place CZL under judicial management and had now merged the balances sheets and assets of the two entities.
The merged company has assets worth $20 million and liabilities totalling $6,6 million making it solvent.
“The reason the companies went under judicial management is purely a question of improper management of the two companies because assets of one were treated as assets of the other, causing confusion,” he said.
During the meeting claims worth close to $6 million were presented.
Sibanda said one of the company’s debtors, the National Social Security Authority (NSSA) which owes $14 million had agreed to pay up.
“We have been in discussion with NSSA and a position has been reached,” he said, adding that the authority agreed to pay the amount once work done had been certified.
So far the company is sitting on $2 million which has been recovered from debtors. Other nine debtors who owe the firm $5 million, have also agreed to pay once certification of work done has been completed.
Costain changed its name to Ceezed in 2011 after  a successful takeover of the company by a management consortium led by group executive chairman Tendai Chimuriwo.
The Chimuriwo-led management consortium increased its stake in the company from 15 percent to 100 percent in the takeover, which was approved by the indigenisation ministry and hailed as a major step towards indigenisation and empowerment programme in the country.Advertisement