We’re not under liquidation threat: Telecel

18 Nov, 2022 - 00:11 0 Views
We’re not under liquidation threat: Telecel

eBusiness Weekly

Business Writer

Telecel Zimbabwe has refuted claims it may go into liquidation, claiming the financial statements used to support the corporate rescue application filed by a workers union at the High Court are “leaked” working documents that lack substance.

In the court application filed by David Mhambare, the Communication and Allied Service Workers Union of Zimbabwe (CASWUZ) secretary general says Telecel, the country’s smallest mobile carrier is insolvent and faces liquidation if no rescue action is immediately taken. Its assets, as of December 31, 2021, were $1,5 billion against total liabilities of $24 billion, pointing to negative equity of $22,5 billion.

But in an opposing affidavit, Telecel, through its chief executive Angeline Vera argues any suggestion that the company will “sink” into liquidation has not “significantly been buttressed by any competent documentation and all references to unaudited working documents illegally leaked has no evidential weight to suggest Telecel is insolvent or heading towards insolvency that requires corporate rescue.”

“It appears to be a leaked working document,” Telecel says, referring to financial statements used by CASWUZ to support the corporate rescue application.

“The author or originator remains undisclosed. The document is not on a stand-alone basis a Telecel document and cannot be produced or relied upon as evidential proof.

In response, CASWUZ says the assertion Telecel is solvent is “grossly misleading and spurious.” It denies claims the supporting documents used are not authentic, but do reflect the accurate liabilities of Telecel.

“These liabilities point to financial distress,” it says.

Telecel argues it has been operating profitably over the years and was adversely affected by the economic downturn from 2019 when the country adopted the local currency and 1:1 policy. This impacted many other companies in the country. It further argues that the company has “gained and continues to gain” subscribers.

Telecel summits negotiations with potential investors are underway. Should the court grant an order to place the company under corporate rescue, the talks will collapse.

However, CASWUZ, citing the POTRAZ consolidated annual report for 2021 disputes Telecel’s claims, arguing “unless there have been substantial changes which had a positive material impact on its performance during the second quarter in 2022.”

On the value of assets, TVera claims they are “seriously understated” based on book value. Telecel has since appointed auditors to undertake an asset revaluation.

But CASWUZ contends that appointing company auditors to undertake asset valuation is irregular as the exercise can only be done by independent asset valuers.

And that the company has engaged auditors to conduct revaluation “is irrelevant as it poses a self-review threat and conflict of interest on the part of the external auditors.”

In any case, the underlying assets are fully depreciated, and obsolete and a revaluation exercise may produce unrealised gains which are not attributed to operations, it adds.

Telecel maintains the current position of the company does not warrant corporate rescue as it is viable and actively trading. Further, the negotiations with investors (are) ongoing and will be seriously prejudiced and probably put to an end to the disadvantage of all stakeholders including Government interest and to workers.

In reply, CASWUZ says the averment that negotiations may be taking place “is just a diversionary and dilatory strategy used by (Telecel) who should have demonstrated its solvency position by presenting audited financial statements to the court.”

On foreign creditors, Telecel submits while it is true that most of the company’s liabilities are to foreign creditors governed by loan and service level agreements, most of the liabilities are owed to the major shareholder of Telecel, the Government.

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