Following claims for additional terminal benefits by groups claiming to be ex-employees of Kafue Textiles Limited, Zambia Privatisation Agency (ZPA) wishes to clarify that all KTZ workers were paid their rightful terminal benefits

I wish to clarify that 412 KTZ employees were paid their rightful terminal benefits in May 2004using funds released by Government amounting to K 11 billion. It should further be noted that, although Government had no legal obligation to pay the workers, it decided to intervene and settle the said amount on behalf of KTZ. KTZ was insolvent with liabilities in excess of K 182 billion.

In order to avoid liquidation and pave way for re-opening the factory, a Scheme of Arrangement was entered in by all of KTZ creditors. The Scheme was subsequently approved by the Lusaka High Court as required under the Companies Act.

Under the Scheme, other KTZ creditors were paid between 10% and 18% of their debts as full and final settlement. However, the employees, were paid 50% of their rightful terminal benefits amounting to K 11 billion, which constituted the highest payment amongst all the creditors. The other option was liquidating KTZ under which the employees were entitled to only three months salary.

Government had stepped in to make the payment to the employees in order to allow the assets to continue being operated in Kafue and not to be relocated to another town as was to be the case under liquidation or as was planned by other bidders in the earlier privatisation attempts.

It should be noted that neither KTZ nor Government has ay further obligation to ex-employees or creditors other than what was agreed in the scheme of arrangement.


Enquiries:

Alphonsious Hamachila
Head of Public Relations
Zambia Privatisation Agency
Telephone: + 260 1 220177
Fax: + 260 1 225270
Email: ahamachila@zpa.org.zm
Website: www.zpa.org.zm