RCC says ‘cash squeeze’ no crisis

THE Roads Contractor Company is not experiencing any unusual cash-flow crisis, although negative publicity surrounding CEO Kelly Nghixulifwa’s suspension has prompted some concerns among investors, acting CEO Noks Katjiuongua said yesterday.

The RCC has taken two body blows in the past month with Nghixulifwa’s shock suspension and the fact that its plans for a high-density residential development in Windhoek’s posh Auasblick suburb were turned down by the City of Windhoek. With two sets of loans known as debentures due to investors over a two-week period since the end of August, some uncertainty had arisen about the RCC’s ability to meet its financial obligations.But both the RCC and one concerned brokerage dismissed claims that the company was in default on any of its loans.Katjiuongua emphatically denied that RCC’s debentures were being called up by the bigger players in the local financial market.Debentures are short-term loans by which the RCC finances projects, which are repaid after a fixed period and at a fixed rate of return.”Some confusion may have occurred because some debentures have matured,” the acting CEO said in a brief telephonic interview yesterday.The fact that these debentures have been rolled over – extended for another, shorter period – had more to do with the fact that the central Government was slow to pay the RCC for services rendered, he said.”We were in a bit of a cash-flow squeeze and we asked them to roll (the debentures) over, but …there is no cash-flow crisis,” Katjiuongua said.Another set of debentures due by the middle of this month also did not present any major problem, he said.This was confirmed by the brokerage house, which said that it had experienced “absolutely no problem” with the RCC’s settling the contract.Concern in the market over the financial management at RCC was exaggerated, and RCC remained a solid client, a manager for the brokerage, who asked not to be named for professional reasons, confirmed to The Namibian.Katjiuongua referred to a recent speech by President Hifikepunye Pohamba in which he called for more efficient management of disbursements to agencies delivering essential services.”We need to be prompt in delivering our services, but it is a struggle when the Government can’t pay us on time,” Katjiuongua said.The periodical cash-flow crisis that many of the parastatal companies experienced was quite typical of developing companies, confirmed Emil van Zyl, an economist with local securities broker Simonis Storm.”They are developing companies that rely on the State for their income, but have to borrow on the short term to finance projects,” Van Zyl said yesterday.”One can expect that when the Government is slow in paying them, that they will feel the squeeze,” he said.The speed at which the RCC Board of Directors under chairman Otto Shikongo moved to contain the damage surrounding Ngixulifwa’s suspension was seen as a positive sign that it took its oversight duties seriously, Van Zyl agreed.Chairman Shikongo is currently travelling in the United Kingdom for a month and could not be reached for comment.* John Grobler is a freelance journalist; 081 240 1587With two sets of loans known as debentures due to investors over a two-week period since the end of August, some uncertainty had arisen about the RCC’s ability to meet its financial obligations.But both the RCC and one concerned brokerage dismissed claims that the company was in default on any of its loans.Katjiuongua emphatically denied that RCC’s debentures were being called up by the bigger players in the local financial market.Debentures are short-term loans by which the RCC finances projects, which are repaid after a fixed period and at a fixed rate of return.”Some confusion may have occurred because some debentures have matured,” the acting CEO said in a brief telephonic interview yesterday.The fact that these debentures have been rolled over – extended for another, shorter period – had more to do with the fact that the central Government was slow to pay the RCC for services rendered, he said.”We were in a bit of a cash-flow squeeze and we asked them to roll (the debentures) over, but …there is no cash-flow crisis,” Katjiuongua said.Another set of debentures due by the middle of this month also did not present any major problem, he said.This was confirmed by the brokerage house, which said that it had experienced “absolutely no problem” with the RCC’s settling the contract.Concern in the market over the financial management at RCC was exaggerated, and RCC remained a solid client, a manager for the brokerage, who asked not to be named for professional reasons, confirmed to The Namibian.Katjiuongua referred to a recent speech by President Hifikepunye Pohamba in which he called for more efficient management of disbursements to agencies delivering essential services.”We need to be prompt in delivering our services, but it is a struggle when the Government can’t pay us on time,” Katjiuongua said.The periodical cash-flow crisis that many of the parastatal companies experienced was quite typical of developing companies, confirmed Emil van Zyl, an economist with local securities broker Simonis Storm.”They are developing companies that rely on the State for their income, but have to borrow on the short term to finance projects,” Van Zyl said yesterday.”One can expect that when the Government is slow in paying them, that they will feel the squeeze,” he said.The speed at which the RCC Board of Directors under chairman Otto Shikongo moved to contain the damage surrounding Ngixulifwa’s suspension was seen as a positive sign that it took its oversight duties seriously, Van Zyl agreed.Chairman Shikongo is currently travelling in the United Kingdom for a month and could not be reached for comment.* John Grobler is a freelance journalist; 081 240 1587