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Evraz: Highveld’s Training Layoff Scheme lapses

Mildred Oliphant
Photo by Duane Daws
Mildred Oliphant

10th February 2016

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/ MEDIA STATEMENT / The content on this page is not written by Polity.org.za, but is supplied by third parties. This content does not constitute news reporting by Polity.org.za.

Evraz Highveld Vanadium (“Highveld”) today announced that the Department of Labour has decided to “pause” the payments of the Training Layoff Scheme (TLS) in response to the announcement that the International Resources Limited transaction has failed.

Following the severe lack in cash flow, Highveld was forced to cease production on 20 July 2015. The Company subsequently issued notices in terms of section 189(3) of the Labour Relations Act 66 of 1995 (“LRA”) on 21 July 2015 and several facilitated consultation meetings were held in terms of section 189A of the LRA under the auspices of the Commission for Conciliation, and Mediation (“CCMA”).

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On 6 October 2015 the Company, the National Union of Metalworkers of South Africa (“NUMSA”) and Solidarity concluded the Training Layoff Scheme Agreement in terms of which, it was agreed that the Company would apply for and participate in the TLS under the auspices of the CCMA, as an alternative to and a means to avoid the proposed retrenchments, for the duration of the TLS, subject to the terms and conditions as set out in the TLS Agreement (“TLS Agreement”).

In considering Highveld’s financial circumstances, the TLS Agreement was subject to the following two conditions precedent:

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·                 The application for the TLS is approved by the Department of Labour and/or MERSETA by no later than 30 October 2015; and

·                 The payments in terms of the TLS are received by no later than 30 November 2015 and such payments continue to be made on a monthly basis for the duration of the TLS.

As a result of the delay in receiving approval from the Department of Labour and/or the relevant funds from the UIF, Highveld subsequently entered into five further agreements to extend the date by which it would receive payments of the TLS stipend (i.e. on 17 December 2015, 5 January 2016, 21 January 2016, 1 February and 8 February 2016). The Company’s application to participate in the TLS was approved by the Department of Labour’s CMMA on 20 October 2015 and training commenced on the 26 November 2015.

As outlined above, the Company’s receipt of the TLS stipend payments on or before 8 February 2016 was one of the conditions for the TLS Agreement to become valid and enforceable. As a result of the Department of Labour’s suspension of the TLS stipend payments, this condition has not been met.

In order to accommodate the extension of the date for the receipt of the payments of the TLS stipend from the UIF to 8 February 2016, the Company had no alternative but to use funds that were not budgeted for remuneration in order to meet its salary obligations for November and December 2015 and January 2016. This has placed the Company under additional financial strain to the extent that it has not been in a position to pay out 13th cheques to qualifying employees since December 2015. The TLS Agreement is therefore of no force and effect and has lapsed and employees will not receive salaries from the beginning of February 2016.

In the absence of the TLS Agreement, Highveld accepts its obligations to pay employees’ remuneration (including outstanding bonuses). However, due to the Company’s dire cash flow constraints, it is not in a position to honour its obligation at this stage.

Highveld undertakes to continue to make every effort to secure additional funding to meet its salary obligations and is considering all alternatives available to it.

Highveld CEO Johan Burger said: “We are obviously disappointed with this development as we still believe that with the support of the Training Layoff Scheme as well as relatively modest funding, part of the company can be saved. However, these developments have significantly reduced our optionality.”

Business Rescue Practitioners will be presenting an update on the business rescue plan creditors on 23 February 2016.


Issued by Brunswick South Africa on behalf of Evraz Highveld

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