Timothy
Business Writer
The resuscitation of David Whitehead (DW), hangs in the balance as the new owner is reportedly hesitating to inject working capital due to numerous lawsuits being mounted by some minority shareholders.
A new investor took over the company two years ago.
After snatching majority shareholding of the troubled business in 2019, Agri Value Chain (AVC), pledged to “immediately move in” to resuscitate the firm.
However, civil suits by Edwin Chimanye, a minor shareholder and former chief executive of the weaving firm, have prevented the revival of the firm.
DW used to be one of Zimbabwe’s largest companies, employing thousands of workers, mainly from, Chegutu, Kadoma, Mhondoro and Chinhoyi areas.
Chimanye is seeking the removal of judicial manager, Knowledge Hofisi and rescission of the 51 percent sale of DW to AVC.
Even though he wants the judicial manager removed, he still wants DW to remain under judicial management, implying he wants a new judicial manager to be appointed.
The cases are pending before the courts.
“The lawsuits have been very costly to the revival of the business because investor’s hands are tied up,” Steven Musapuri, chairperson of workers’ committee said on Thursday.
“As workers, we were so hopeful when the company secured an investor after several years but we are still stuck. However, we would like to commend the investor for paying wages and salaries even if there is no production taking place,” added Musapuri.
The eight year – long hunt for investor for DW was sealed in May 2019. The shareholding acquired by AVC was previously owned by Elgate Holdings, which lost its 51 percent after failing to fully pay for the shares more than a decade after signing a share subscription agreement with David Whitehead. The agreement was terminated in April 2019 on the basis of “non-performance” by Elgate when the High Court ruled the concession for the purchase of the shares be revoked.
In terms of section 30 of the company’s articles association, “any shares forfeited shall be deemed to be the property of the company and the directors, may sell, re-allot or otherwise dispose of the same in such as manner they think fit.”
The coming in of the new investors was cheered by many stakeholder including workers and businesses in Chegutu and Kadoma, where the company owns factories.
“David Whitehead used to have a significant impact on our local economy and its collapse was felt by many businesses here in Kadoma,” Alice Rumbi, a former employee said.
DW woes began around 2004 when the company–weighed by operational challenges and saddled with huge debts, was first placed under judicial management.
Poor management has also been blamed for the collapse of the company. At the time the company was first placed under judicial management, Chimanye was the CEO.
Since 2004, DW remained under the court-sanctioned reconstruction under three different administrators.
Dr Cecil Madondo of Tudor House Consultants, was appointed in 2005 and managed the company until 2008. Two years later, Elgate applied for another judicial management after DW plunged into another financial crisis.
In 2014, DW was saved from liquidation after the High Court granted final judicial management order with Hofisi confirmed the final judicial manager.
In pursuit of re-industrialisation, Zimbabwe has embarked on Sector Specific Strategies with a view to increase production, productivity and profitability as the country leverage the economy into the international market. Cotton to clothing value chain is among specific sectors being targeted by the Government.
“Zimbabwe is exporting a lot of value because we lack capacity to process lint (processed cotton),” said Carlos Tadya, an investment analyst with a research company.
“It is our hope to see David Whitehead coming back again.”
Bongani Ndlovu