GRACE CHAILE LESOETSA writes
VEDANTA Resources Holding Limited and two others have sued Konkola Copper Mine (KCM) provisional liquidator, Milingo Lungu, challenging the splitting of the mining firm.
The three, Vedanta Resources Holding Limited, Vedanta Resources (Jersey II) Limited and Vedanta Resources Limited have sought leave to sue KCM PLC for the same reason.
On December 28 last year, Mr Lungu issued a management brief to KCM employees, announcing the reorganization of the firm.
Under the reorganisation, Mr Milingo proposed to restructure KCM into two subsidiary companies effective February 1, this year.
But the three want the Lusaka High Court to order Mr Lungu to immediately reverse any process of KCM reorganisation.
Vedanta Resources Holding and two others have contended that Mr Lungu does not have the power to carry out the reorganisation of KCM business, assets and affairs in the manner he announced on December 28, last year.
They also want an order of injunction restraining Mr Lungu from undertaking any reorganisation of KCM or transferring, disposing of, selling or dissipating the assets until the determination of the proceedings.
In a statement of claim, the three companies stated that KCM holds three large scale mining licences and a mineral processing licence to undertake mining operations at Chingola and Chilabombwe.
Vendata Resources Holdings stated that it holds 79.4 percent of the shares in KCM, while ZCCM-IH was a minority shareholder at 20.6 percent.
It stated that through its subsidiary Vedanta Resources (Jersey II) provides significant loans to KCM including an additional US$416,500,000 during the 12 months ended March 31, 2019.#
“That by a common terms agreement dated 31, October 2012, as amended and restated entered into an agreement between second defendant as borrower, the Standard bank of South Africa Limited as agent and various lenders, the lenders agreed to provide the second defendant loan facilities in the aggregate amount of US$700,000,000, subsequently increased to US$820,000,000,” it said..
Vedanta Resources Holdings said that KCM failed to meet obligations to the finance parties and between June 28, 2019 and July 20 2020.
Vedanta Resources (Jersey II) paid in total a sum of US$120,400,000 pursuant to the demand guarantee .
It stated that by operation of law, it is subrogated to the rights of the finance parties under the security in respect of its right to indemnification by KCM adding that it is a secured creditor of the mine in US$ 120,400,000.
Vedenta Resources Holdings claim that the effect of reorganisation would be to remove KCM completely and transfer all of its assets into SmelterCo and Konkola Mineral Resources Limited (KMRL).
The three argue that the proposed reorganisation had not been sanctioned by any order of the Court nor approved by the security trustee or the shareholders of KCM.
They claim the reorganisation was designed to facilitate the sale of the business and assets of KCM to a third party in a way that could not be achieved by Mr Lungu within his powers and without supervision of the court.
Vedanta stated that it has never consented to the proposed reorganisation nor has it been consulted and that if it proceeds, it would prejudiced.
The three stated that by the proposed actions of Mr Lungu and KCM they would continue to suffer loss and damage.