Zimbabwe: David Whitehead Investor to Raise Stake

24 January 2020

AGRI Value Chain Zimbabwe (AVCZ) is set to raise its shareholding in David Whitehead Textile (DWT) after some minority shareholders agreed to dispose of their stake.

AVCZ initially acquired 51 percent stake, which was held by Elgate Holdings in May last year for $5,4 million. Elgate had failed to fully pay for the shares more than a decade after signing a share subscription agreement with DWT. The agreement was terminated in April last year on the basis of "non-performance" by Elgate. The High Court ordered the concession for the purchase of shares be revoked.

AVCZ is a local investment company whose business interests include milling, cotton farming and ginning as well as production of edible oils in and outside the country.

In addition to the share subscription consideration, AVCZ has also extended additional funding for the settlement of all pre-judicial management creditors and post-commencement debts, the process currently underway and nearing completion.

Judicial manager Knowledge Hofisi, confirmed that "a sizeable number of minority shareholders" are in the process of disposing of their equity to AVCZ.

"AVCZ and the judicial manager of DWT are now working closely to revive production, starting with the Chegutu and Kadoma factories," judicial Mr Hofisi said.

"The company commenced settling its pre- and post-commencement creditors in 2019 and the process is nearing completion. In view of the above developments, the judicial manager has started taking steps to remove the company from judicial management by March 31, 2020. The company acknowledges and appreciates the support received from its key stakeholders, which include Government, the Reserve Bank of Zimbabwe, ZAMCO, customers, creditors and employees."

DWT's woes began around 2004 when the company - weighed by operational challenges and saddled with huge debts - was first placed under judicial management.

Since then, it largely remained under the High Court-ruled reconstruction under three different administrators. First was Dr Cecil Madondo of Tudor House Consultancy who steered the company between 2004 and 2008. Two years later, DWT was again placed under provisional judicial management after plunging into financial problems.

Mr Militala of Petwin Executors, was then appointed provisional judicial manager.

The sun almost set for DWT after Mr Militala recommended liquidation of the company, arguing it had failed to secure investors. In his report, Mr Militala said the reconstruction of the company was not "serving any purpose" as no investor was prepared to inherit the company's huge debt. He said access to capital was a "virtual impossibility" as banks had minimal funds to lend. The little funding available then was on a short-term basis, which was not aligned to DWT trading cycles.

In 2014, DWT was saved from liquidation after the High Court granted final judicial management order with Mr Hofisi subsequently confirmed the final judicial manager.

Some of the creditors that have been paid since the coming in of AVCZ include the Zimbabwe Asset Management Company ($2,1 million), Zimbabwe Electricity Transmission and Distribution Company ($1 million), Zimbabwe Revenue Authority (about $200 000) the National Social Security Company ($280 000) among others.

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