BULAWAYO – The London Stock Exchange (LSE) has approved an application by the troubled Hwange Colliery Company for an indefinite suspension from the stock market.
Hwange was placed under reconstruction by the Zimbabwe government in 2018 under the controversial Reconstruction of State-indebted Insolvent Companies Act, despite objections from minority shareholders.
The company subsequently suspended trading on the Zimbabwe Stock Exchange (ZSE) and the Johannesburg Stock Exchange (JSE).
“The Financial Conduct Authority temporarily suspends the securities set out below from the official list effective from February 10, 2020, at the request of the company,” the LSE said in a statement.
In a notice to its shareholders, Hwange said: “Hwange wishes to advise shareholders that following the suspension of trade on the JSE that has been in force since November 2018, it has successfully requested that the FCA (Financial Conduct Authority) in the UK suspend its listing on the UK Official List, which suspension also suspends Hwange’s trading on the London Stock Exchange.
“The request for suspension was approved by the FCA on 10 February 2020, with the suspension effective from 10 February 2020. Shareholders will be updated in due course.”
The government, the biggest shareholder in Hwange with 36.7 percent, defended the decision to place Hwange under reconstruction saying the move was aimed at saving its assets from creditors.
The company’s cost of production was greater than its sales revenues at the time.
Hwange owed the government US$150 million and Mota Engile US$42 million at the time.
British tycoon Nicholas van Hoogstraten, who holds 31 percent shares in Hwange, opposed the reconstruction which places the company under a government-appointed administrator. He had offered to buy out the government’s shares with a US$70 million offer, but it was rejected.
Hoogstraten blames corruption and poor management for Hwange’s troubles, which have left the company on the brink of collapse.
