Vedanta Resources Holdings Limited (Vedanta) has deposited US$245.75 million into a court-designated escrow account pursuant to the Scheme of Arrangement for Konkola Copper Mines (KCM) approved in June.
In a statement issued July 19, Vedanta confirmed that the funds now sitting in escrow will be used to settle creditor claims, support social community development programs and pay a one-off bonus to KCM employees.
Among the creditors to be paid from these funds are those designated as Class 2 in the Scheme of Arrangement. Class 2 creditors are those with claims equal to or greater than US$1 million.
In approving the Scheme of Arrangement last month, Zambia’s High Court ordered Vedanta to deposit the funds into an escrow account, broken down as US$225 million for creditor settlement, US$20 million for a once-off community support loan and US$750,000 for staff bonuses, also once-off.
According to the court order, funds should have been deposited by July 8. It’s an open secret that Vedanta is yet to marshal the quantum of financial resources needed for it to meet the conditions to fully reclaim the mine assets.
Vedanta said the deposit paves the way for the imminent reinstatement of the KCM board of directors and the return of full management control, “which will allow Vedanta to take the necessary steps required to allow KCM to start to deliver to its full potential.”
Chris Griffith, Vedanta Base Metals Chief Executive Officer is quoted as saying, “We are delighted to confirm the transfer of funds into a designated Escrow account as per our earlier commitment. We are confident that with the full support of the government and other key stakeholders, we will soon be able to help KCM reach its full potential.”
Zambians, especially the residents of Chingola and Chililabombwe, have been waiting with bated breath for KCM to resume productive full operations nearly a year after the government’s announcement to return the asset to its legal owner, Vedanta.
However, the process has been clogged in legalities culminating into the Scheme of Arrangement and termination of the winding up proceedings brought against KCM by ZCCM-IH in 2019.
A Scheme of Arrangement is a court-approved agreement between a company and its creditors or shareholders. In Zambia, it is provided for under the Corporate Insolvency Act of 2017 and permits a company to enter into a compromise or arrangement with its creditors.
