20 December 2012

Zimbabwe: David Whitehead Faces Liquidation

DAVID Whitehead Ltd could go into liquidation as provisional judicial manager Mr Winseley Militala has so far failed to secure investors or raise capital. The textile company was, for the second time, placed under judicial management in December 2010, having gone through the same reconstruction between 2005 and 2008 under Dr Cecil Madondo.

Elgate Investment, which acquired a 52 percent stake when the company was under the administration of Dr Madondo, applied for another judicial management after the company plunged into a serious financial crisis.

DW, which has since stopped operations in Chegutu, Kadoma and Gweru, was at that time failing to pay wages, electricity and water among other consumables.

In an interview with Herald Business, Mr Militala said it had been difficult to raise capital or secure strategic partners and hinted at liquidation as one of the "options."

"We have people we are talking to whose identity I cannot disclose at the moment. But this thing has taken time and liquidation could be an option," he said.

"I am finalising my report for the creditors and members of the company for circulation and eventual consideration at their respective or combined meetings to be held in due course. This is work in progress, and a matter before the court."

While Mr Militala could not be drawn into disclosing the financial status of the company, sources said DW owes its creditors about US$12 million.

Sources said it was "most unlikely" the judicial manager would be able to secure investors willing to assume the US$12 million debt.

"There are two things, the first one . . . it is difficult for him to get credit to restart the business, considering the prevailing liquidity situation in the country and, secondly, to get someone prepared to buy the company and assume the debt of US$12 million," he said.

"A few guys have come, tested the machines, but they never came back. That tells a big story."

Zimbabwe Textile Workers' Union secretary-general Mr Silas Kuveya said his union was opposed to the liquidation of the company considering the size of DW.

"Liquidation is not an option (that) we are willing to consider.

"It would be a disaster for more than 1 000 workers who are employed by the company. We believe that it is possible to get investors who can come in and save the company," he said.

DW was the major employer in Chegutu and its closure left more than 3 000 people jobless.

At one point, the company was the biggest textile producing firm in Zimbabwe.

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