Search
Tuesday 22 January 2019
  • :
  • :

Compromise deal

….RCC board will be fired if it opposes decision

Cabinet seemingly reached a compromise deal on the future of the cash-strapped Roads Contractor Company(RCC), when it decided to endorse a recommendation to place the company under judicial management.
Judicial management provides corporations with a statutory moratorium against law suits from creditors, while the judicial manager assesses the business position and then generates a strategy on the best way forward.
The judicial manager will assume the role of management and controls the day to day operations of the business.
Minister of Public Enterprises Leon and Works and Transport Minister Alpheus !Naruseb both held different views regarding the future of RCC in the run-up to Wednesday’s unexpected decision.
Jooste was pushing for the closure of the company while !Naruseb argued against RCCs closure.
“The two ministers have been on opposite ends since the creation of Jooste’s ministry, you look at TransNamib, RCC and even Air Namibia, they hold divergent views on almost everything.
Jooste prefers to be technical by using the frugal business approach while !Naruseb is more interested in taking the political approach,” said a cabinet source.
The source claims that the friction between the two is a result of the decision to move all commercial parastatals under the wings of the Ministry of Public Enterprises.
Making the announcement yesterday, Jooste said the Cabinet Committee on Overall Policy and Priorities decided to seek placement of RCC under judicial management because of the company’s precarious financial situation and debts just under N$1 billion.
The company’s assets have an estimated value of N$300 million.
The process is still subject to parliamentary endorsement and subsequently the Master of the High Court.
Seeing that the board vehemently opposed a move to liquidate or place the company under judicial management, there are talks that the board plans to challenge the decision.
Jooste made it clear that should the board oppose the decision, government will be left with no choice but to dissolve it and replace it with an interim board.
Jooste said the board has been part of the process since it started and they were given ample opportunity to share their own views.
“The board has not been excluded from the process.
We called in the board and acting CEO to communicate the decision with them. But up to now we have not received any formal information that they want to oppose it,” he said.
No jobs will be lost during the judicial management process and the monthly salaries of the 393 employees will be paid directly from Treasury, Jooste said.
RCCs monthly salary bill stands at N$7 million.
During the process, said Jooste, employees will not receive any benefits, only basic salaries.
The RCC board and management has been making frantic efforts to convince government to recapitalise the company and let it continue as a separate entity.
The company’s leadership even went as far as making efforts to have the company recapitalised and also crafted a business plan which has since been rejected. Jooste said the business plan was rejected because it is not feasible.
The minister lamented that in the past turnaround strategies were approved without proper assessment to see if they are feasible.
The RCC board recently said it is confident that the company could be transformed from a historic liability to a shareholder’s investment within 3 -5 years provided everyone made constructive contributions.
To work towards that goal, a number of initiatives, plans and strategic efforts have apparently been developed and put into place, such as board governance structures, a 5-year strategic business plan and restructuring the organization.
According to the board, the company had commenced the process of strengthening its financials, especially the balance sheet, as well as the pursuit for interim cash requirements for operational turnaround and has identified the need of enhancing the human resource base in order to realign it to the new strategy.
To achieve the goal of a net asset base of N$ 900million, the board claimed the organization needed a once-off capital injection of N$300 million from its shareholder.
Efforts to get hold of RCC board chair Fritz Jacobs yesterday proved futile.




Leave a Reply

Your email address will not be published. Required fields are marked *