Zambia: ZCCM-IH Owes Govt Over K2 Billion

Zambia Consolidated Copper Mines-Investment Holdings (ZCCM-IH) owes the Government a total of K2.139 billion in loans arising from the restructuring programmes undertaken prior to the company's privatisation more than a decade ago.

And the Government has accepted ZCCM-IH's proposals to convert all or part of the loans amounting to K2,139 billion (approximately US$425 million) owed to equity through a rights issue transaction.

According to a statement posted on the ZCCM-IH website, the leading local mining holding company, which oversees public shares in the mining sector, currently has significant loans from the Government.

ZCCM-IH, owns shares in all the country's leading mining companies on behalf of the Zambian Government.

"The majority of these loans is owed to the Government of the Republic of Zambia and continues to be carried on the books of the company. As at March 31, 2011, ZCCM-IH financial statements reflected loans amounting to K2,139 billion (approximately $425 million) owed to the Government," said the cautionary statement issued by Stockbrokers Zambia limited.

These loans have placed a significant burden on the company with the result that ZCCM-IH has had a weak balance sheet from 2000.

The Government which has been engaged oveer the issue, has since indicated that it was ready to covert the loan into equity through a rights issue transaction.

The main objective, amongst others, of the proposed debt-equity conversion is to clean the ZCCM-IH balance sheet.

ZCCM-IH is currently liaising with the Government to agree the terms of the transaction.

The holding company's shares are listed on the Lusaka Stock Exchange (LuSE) and also traded on the Paris Bourse in France.

In compliance with the Securities Act, Cap 354 of the Laws of Zambia and the Listing Rules of the LuSE, further announcements will be made to inform the shareholders and the investing public as the transaction progresses.

Accordingly, shareholders are advised to exercise caution when dealing in the company's securities until a full announcement is made.

The Stockbrokers further advised markets and shareholders to follow new developments relating to the company.

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