Troubled construction company, BETA Holdings (BETA), has applied to the Master of the High Court to be placed under corporate rescue proceedings, citing production failures that have left it unable to service nearly US$10 million in debt.
This decision follows a resolution by the company's directors on December 24, last year, who concluded that though financially distressed, BETA has a reasonable prospect of recovery if placed under corporate rescue.
In a sworn affidavit filed on December 30, the company disclosed that its financial challenges began in April 2023, when insufficient working capital severely affected production.
According to the statement, the company's subsidiaries have been unable to operate at optimum levels, causing a sharp decline in revenue.
The company further revealed its inability to repay nearly US$10 million in loans and admitted signing an unlimited guarantee for a loan advanced to its subsidiary, Beta Bricks (Private) Limited, which is also failing to meet its repayment obligations.
As of November 30, last year, Beta Bricks was in arrears of US$1 248 617.11, leaving BETA potentially liable for the full outstanding balance of US$9 620 743.25. This liability arises at a time when the company is generating no revenue to address its debts.
Despite these challenges, the board remains optimistic, asserting that BETA is still financially viable.
The directors believe that with sufficient time and restructuring of its subsidiaries, the company can meet its obligations.
They emphasised that BETA's strong market presence and reputation for producing reliable, high-quality products position it well to recover, especially given the current construction boom in Zimbabwe and the high demand for its offerings.
The company has faced severe operational challenges, including delays in product deliveries, employee strikes, and customer dissatisfaction.
Deliveries of as few as 5 000 bricks could take up to three months, often causing disputes, while roofing tile orders have also experienced significant delays.
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BETA attributed these issues to liquidity constraints and the financial strain caused by expansion projects, which it claims worsened its already tight budgets.
Corporate rescue, governed by the Insolvency Act [Chapter 6:07] of 2018, aims to rehabilitate financially distressed companies by restructuring their affairs to avoid liquidation.
BETA's directors are relying on this legal mechanism to implement a turnaround strategy and restore the company's financial stability.
