(Bloomberg) — Evraz Plc’s South African steelmaking unit said one of its lenders is stalling a process to rescue the company from insolvency as the bank refuses to cede control of a debtors’ book.
Evraz Highveld Steel & Vanadium Ltd.’s business rescue practitioners asked a court to order that Sasfin Holdings Ltd.’s banking operation releases debtors ceded to it as this would allow the steel producer to source funding from the state-owned Industrial Development Corp. of South Africa, the company said Monday in a statement.
Sasfin has imposed 36 million rand ($3 million) in penalties after an agreement lapsed when Evraz Highveld requested business protection last month. This is in addition to the 35 million rand it’s collected from Highveld, funds the bank is retaining. Sasfin declined to comment as the matter was before court, spokeswoman Cathryn Pearman said by e-mail.
“Highveld disputes that Sasfin is entitled to retain the debtors’ book of Highveld after having collected all the capital and interest outstanding on the facility,” the producer said. “These actions have severely compromised Highveld’s ability to access the cash flow required to save the business.”
Evraz Highveld applied for bankruptcy protection after metal prices sank, it said last month. SouthAfrica’s steel industry is struggling as spending on infrastructure projects remains low, manufacturing declines and cheaper imports enter the market.
The application to the High Court will be heard May 28, Evraz Highveld said.
