Mitsubishi Corp of Japan has announced that Hernic Ferrochrome, its local unit based in South Africa has just filed for bankruptcy.
The company said Hernic Ferrochrome filed for bankruptcy due to financial difficulties and the fall in the price of alloy.
Mitsubishi Corp holds 53.8% of shareholding in Hernic Ferrochrome.
The company said:
Since March 2000, when MC first became a shareholder of Hernic, Hernic has taken various initiatives with a view to maximizing its corporate value as a ferrochrome producer. Hernic has, however, continued to suffer financial hardship as a result of, inter alia, market challenges.
The decision by Hernic’s Board of Directors to file to initiate the business rescue proceedings followed a comprehensive assessment by Hernic’s Board of Directors of financial alternatives. The aim of business rescue in South Africa is to restructure the affairs of a company that is financially distressed.
The business rescue practitioners whose appointment is expected to be formalized shortly will manage the business and business rescue proceedings of Hernic going forward.
MC does not expect this development to have any material impact on its consolidated earnings for the period ending March 2018.