AHL to fire 500
Financially struggling AHL Group Limited, formerly Auction Holdings Limited, says it will lay off 500 employees in the next two months and close down three subsidiary companies to remain afloat.
AHL Group Limited senior management team member disclosed the developments to Reserve Bank of Malawi (RBM) officials as part of the central bank’s nationwide initiative to meet companies defaulting on remitting pension deductions to fund managers.
Through its Pension and Insurance Supervision Department, RBM is conducting an investigation expected to lead to prosecution of employers not complying with the Pension Act, 2010.
In an interview on Wednesday, AHL Group Limited acting chief executive officer (CEO) Alfred Nkhono said the company was sailing through troubled waters emanating from financial challenges dating back to 2017 when it made a K42 billion loss.
But he expressed hope that an impending bailout by AHL Group Limited majority shareholder—Agricultural Development and Marketing Corporation (Admarc)—and the ongoing restructuring initiative will save the company from collapse.
Nkhono said: “We are undergoing serious and massive restructuring; the board has agreed to the restructuring plan. We will close three companies and we will be laying off 61 percent of the [767] staff to save the company. At the moment, we are technically insolvent.”
The three subsidiaries earmarked for possible closure are AHL Commodities Exchange, ICT Tech Africa (Malawi) Limited and AHL Chemicals and Steel.
Malawi Leaf, another AHL Group subsidiary, is also under consideration for closure, but a decision is yet to be made. On the other hand, AHL Commodities Exchange could also remain open despite being earmarked for closure, according to officials.
Three remaining subsidiaries—Agricultural Trading Company (ATC), AHL Tobacco Sales Limited and TIL Limited—will absorb portfolios from the other companies while the retrenchment of staff initially scheduled to start on June 30 will be carried out between now and August 31 2021.
Nkhono said the financial challenges have led the company to fail to pay both salaries and pension funds, with arrears now totalling K3.2 billion. But he said the company was hoping to pay off the arrears through the expected bailout.
The AHL Group board approved the restructuring on June 18 this year.
On his part, RBM chief examiner in Pension and Insurance Department Paul Nyirenda said they informed AHL Group of its pension non-compliance and delivered an administrative penalty of 21 days to clear the arrears or risk being dragged to court.
He said: “AHL has accumulated pension arrears which when we add with interests are coming to K3.3 billion which is quite a substantial amount.
“As a result, we have been engaging AHL, we have had several meetings. At one time they were at K2.2 billion and they came up with a payment plan which they submitted to the registrar, however, we have noted that the arrears have continued to grow. We recently published a list of companies with arrears to comply with the law.”
Nyirenda said RBM also sent similar warnings to 24 other employers who have stayed over 12 months without clearing the arrears or risk court action after a 21-day ultimatum.
In a Report on the Review of AHL Restructuring June 2021 by a task force mandated by the AHL Group board, it was reported that during a December 11 2020 Annual General Meeting shareholders approved borrowing of K6 billion from CDH Investment Bank to cover working capital and restructuring costs.
The funds were meant to cover salary arrears for September 2020 to March 2021 estimated at K3.5 billion and restructuring costs pegged at K2.5 billion.
The task force also said it considered AHL Group management’s report on the refurbishment costs of the commodities exchange premises belonging to Press Properties Limited initially put at K965 million.
Further, the task force recommended a forensic investigation into the commodities exchange’s costs of incurred and capitalised in the refurbishment of the rented premises.
