Chronicle Editor
Harare Bureau
DAVID Whitehead Textiles has paid off significant pre and post judicial management debts, a development that will pave way for the resuscitation of the company.
This comes after Agri Value Chain (AVC) acquired 52 percent stake in David Whitehead – under judicial management – at a price consideration of $5,4 million in May.
The eight year hunt for investor for DWTL – previously Zimbabwe’s largest textile company – employing nearly 4 000 people, saw AVC, a local investment company whose business interests also include cotton farming, ginning as well as producing edible oils in and outside the country becoming the majority shareholder.
The shares acquired by AVC were in relation to Elgate Holdings interests, which lost its 51 percent equity after it failed to pay for shares more than a decade after signing a share subscription agreement with the former ZSE listed firm.
The agreement was terminated in April this year on the basis of “non-performance” by Elgate. The High Court ordered the concession for the purchase of shares be revoked.
Some of the creditors that have been paid since the coming in of AVC 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.
The information is contained in a notice of opposition filed at the High Court by David Whitehead judicial manager Mr Knowledge Hofisi, challenging the application by one of the shareholders Mr Edwin Chimanye, who is seeking his immediate removal.
Mr Chimanye is arguing that Mr Hofisi should be removed because he has overstayed. He is also challenging the sale of the 51 percent shareholding to Agri Value Chain.
However, Mr Hofisi is arguing that the process to remove the judicial management is preceeded by the settlement of pre-commencement obligation, a process which is underway.
“The second respondent is in the process of being removed from judicial management in terms of section 314 (1) of the companies Act,” reads part of the opposition notice.
“The reasons that culminated in the placement of DWTL under judicial management have been significantly removed such that continuation is no longer desirable.
“It is clear that the significant progress has been made to settle both pre and post judicial management obligations. The settlement of both pre and post commencement creditors, a process that is nearing completion, marks the hallmark of any judicial management that will result in a balance sheet of the company poised for growth.”
David Whitehead 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 remained under the High Court-ruled reconstruction under three different administrators.
Dr Cecil Madondo of Tudor House Consultancy was appointed in 2004 and was the judicial manager until 2008. In 2010, Elgate applied another judicial management after the company again plunged into financial problems.
Mr Militala of Petwin Executors, was appointed the judicial manager of the company.
The sun almost set for DW after Mr Militala recommended liquidation of the company, arguing the company 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 was on a short-term basis which was not aligned to DW trading cycles.
In 2014, DWTL was saved from liquidation after the High Court granted final judicial management order with Mr Hofisi subsequently confirmed the final judicial manager.
Formerly owned by Lonrho plc before a management buyout in 2001, led by former chief executive Mr Chimanye, it has three factories in Chegutu, Kadoma and Gweru.
The company used to produce about 20 million metres of fabric per year, while directly employing 4 000 workers and thousands in down and upstream industries.
AVC has since indicated plans to immediately revive the company and plans to invest nearly US$10 million during short to medium term.
Online Reporter