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Oliver Kazunga Senior Business Reporter
SHAREHOLDERS of Bulawayo-based Merlin Pvt Limited are crying foul over the failure by the firm’s judicial manager, Cecil Madondo, to resuscitate operations at the troubled textile company.The company has been under provisional judicial management since 2011.
One of the company’s shareholders, Delma Lupepe, told Business Chronicle that the appointment of Madondo of Tudor House had been challenged and resisted by shareholders and some creditors.
“The appointment of Madondo as judicial manager of Merlin was challenged and resisted by Maydeep Investments Limited, the shareholder of Merlin.
“His confirmation as final judicial manager was also challenged and resisted by the shareholders and some of the creditors. The reasons cited were that his credibility and trust did not conjure confidence in the shareholders, some of the creditors and potential investors. He landed the job through canvassing through the union so he did not enjoy the support and confidence of all the stakeholders,” Lupepe said.
“He (Madondo) promised creditors payment within a year and failed to deliver on the promise. He is based in Harare and has no presence in Bulawayo and that causes the company to incur huge costs for his travel and accommodation. He has also failed to present a progress report to the shareholders and the Master of the High Court.”
Lupepe said when Madondo was appointed provisional judicial manager, he indicated to the shareholders that he had identified three “investors”.
“The ‘investors’ subsequently evaporated and he also promised stakeholders that he would secure working capital and credit lines before August 2012 and start paying creditors before 31 December 2012.
“He further promised to have all creditors paid within 36 months of resumption of operations,” said Lupepe adding that the promises never materialised.
He said three years on, Merlin was still closed with Madondo having no plan or idea as to how to resuscitate operations.
The company’s creditors were still to be paid and workers remain redundant.
Old Mutual, one of the major creditors, Lupepe said, successfully applied for removal of the company from judicial management last month citing lack of progress in the resuscitation of the company and failure by Madondo to fulfil his promises.
“The shareholders immediately resumed discussions with creditors and within a week had found a credible investor who is prepared to pour $30 million into Merlin for new equipment including machinery for manufacturing pampers and women’s sanitary wear, a feat Madondo failed to achieve in three years,” he said.
Lupepe said Madondo appealed against the judgment to remove Merlin from judicial management citing a “flimsy” excuse that the company was exposed to creditors, a development that would see them pouncing on the company.
“Unknown to Madondo is that creditors like Old Mutual are keen to afford Merlin the moratorium to resuscitate its operations and hopefully start repaying its debts, something that it can’t do under judicial management,” he said.
Lupepe said when workers approached Madondo to be the judicial manager, they were under a very mistaken impression that in the previous engagement he was successful in restoring the company to sound footing.
“Madondo failed to pay the creditors from the operations of the company. It was Maydeep Investments (Private) Limited that paid all the creditors including workers,” said Lupepe.
“The effects of Madondo’s appeal that the company returns to judicial management will see the workers continuing to suffer save for a few workers committee members whom we have reason to believe have been removing property from the factory possibly for sale in Harare for their benefit leaving the rest of the workers suffering. The creditors’ situation remains gloomy and the banks continue to sell assets of shareholders in an attempt to recover the little they can salvage.”
Lupepe said the attitude of Madondo indicates that he was hell bent on seeing to the liquidation of Merlin much to the disadvantage of workers, Bulawayo industry and other stakeholders which vindicates the shareholders’ concerns over the years.
He said it was the shareholders’ plan to repair the equipment using spares that were received from Europe after the ill-advised action of the workers union to place it under judicial management.
According to the shareholders’ resuscitation plan, the first phase was to repair the equipment from spares at hand over the shut down period.
“In fact a team of engineers had already been identified to start the preparatory work on December 2, 2014 but were denied access by Madondo through his security company and the militant workers committee.”
Merlin intends to resume operations by the first quarter of next year.
Madondo could not be reached for comment by the time of going to print yesterday.
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