adminChitungwiza.
Arda owns the land on which the textile manufacturer operates and has up to March 20 to vacate the property.
Modzone presently owes Arda over US$26 000 in outstanding rentals. The decision by Arda to evict Modzone comes after the parties failed to reach an agreement on the disposal of the land.
Arda acting general manager Mr William Mbona has informed Modzone in writing of the management’s decision.
“It is common cause that the Agricultural and Rural Development Authority and Modzone have failed to reach a consensus on the sale of the above property. It is important to note that Modzone, as the sitting tenant, has remained silent on the disposal of the property.
“Accordingly, our offer of right of first refusal to you has been turned down and cannot be held ad-infinitum,” reads part of the letter dated December 19 2012.
The move by Arda to dispose of its land and evict Modzone will leave hundreds of workers jobless.
A source close to the Arda-Modzone saga told The Herald that Modzone was central to the economy of Chitungwiza and the livelihoods of its workers and their dependants.
“Arda’s decision would render the workers destitute,” said the source, who preferred anonymity.
“There is also the risk of social unrest as a direct result of the de-industralisation because many people depend on Modzone.”
The source added that Government should protect the industry and people of Chitungwiza by allowing the utilisation of the land and buildings at Modzone, which are State assets, to enable foreign shareholders to inject the necessary capital.
The company needs up to US$16 million in recapitalisation in order to meet both local and export markets.
This, he said, would see the company regaining its status as the economic lynchpin of Chitungwiza.
Another source said the reason Arda was giving was short term in nature compared to national interests in that they want to raise money to fund their operations and pay salaries and other expenses.
“Arda should seek financial assistance from Government or foreign investors who had expressed willingness to support agricultural development,” said the source.
When contacted for comment yesterday, Modzone legal advisor Mr Succeed Takundwa said: “The matters involved are within Government and are being dealt with through the relevant channels and particularly Cabinet as the assets involved are State property.”
Modzone is majority owned by Iranian investment company Saba Jahad, which has an 83 percent stake, while the Industrial Development Corporation holds the remaining 17 percent.
Last month, IDC indicated its intention to increase its shareholding in Modzone, which is facing liquidity challenges and is failing to finance rehabilitation programmes critical to increasing capacity.
The eviction of Modzone from the Arda property also comes at a time when the IDC was trying to secure US$10 million as capital that the Iranian partners had promised to inject into the business three years ago.
Modzone was established in 1997 and restructured in 2004. The group is involved in the manufacture, wholesale and retail of cloth, fabric, blankets, yarn and other related products. It has the capacity to employ over 1 000 workers.
Online Reporter