Omega Ukama 
BORDER Timbers’ shareholders will next month meet to clear issues holding up its exit from judicial management, which it has pursued for a long time.
The company was placed under judicial management in January 2015 after failing to service debts to several financial institutions amounting to $20 million.
The company is convening an extraordinary general meeting (EGM) on January 12, 2022, where shareholders will be asked to approve a proposed settlement agreement to apportion the final awards issued by the International Centre for the Settlement of Investment Disputes (ICSID) Arbitral Tribunal in 2015.
The company’s land was expropriated by the government of Zimbabwe in 2005.
In 2010, the company and its associated companies, Hangani Development and Timber Products International, filed a request for arbitration with the ICSID against the government under the investment treaty between Switzerland and Zimbabwe.
Claims were also brought against the government in separate arbitral proceedings by the company’s then majority shareholder, the von Pezold Family (VP) under the same bilateral investment treaty as well as under a bilateral treaty between Germany and Zimbabwe.
In July 2015, the arbitral tribunal issued two separate awards in favour of both claimants.
That relief was compensation in the sum of US$124 041 223.
In October 2015, the government instituted annulment proceedings seeking to set aside the final awards.
The arbitration proceedings concluded in November 2018 after the ICSID ad hoc committee dismissed the government’s annulment application.
The awards prohibited double recovery between the company and VP but, the ICSID tribunal did not determine the manner of apportionment of the same. This has resulted in the separate claimants needing to agree on the split and apportionment of the awards, leading to protracted negotiations.
The parties have reached a settlement agreement in terms of which the awards will be split in the percentages of 57,5 percent to the company and 42,5 percent to VP.
Meanwhile, Border Timbers has returned to profitability and the apportionment of the awards will facilitate its exit from judicial management. The company, however, currently has directors who were stripped of their powers in 2015. As such, shareholders will also elect board members at the upcoming EGM.
Border Timbers’ main business is timber and forestry milling, which it operates on about 48 000 hectares of land, almost half of which is plantable, across four estates around Mutare, Zimbabwe. The company’s two sawmills have the capacity to produce 150 000 cubic metres of sawn logs annually. It also has a pole treatment plant.
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