National Blankets seeks additional $500,000 loan for working capital

Oliver Kazunga Acting Business Editor
TEXTILE firm National Blankets is negotiating with CABS to increase the amount of a loan it secured from the bank to $1 million in order to improve the company’s working capital.Recently, the financial institution advanced $500,000 to the Bulawayo-based company.

The firm is one of the ailing companies in the city that have been placed under judicial management owing to operational challenges.
According to the firm’s unaudited financial statements for 11 months ending November 30, 2013, the judicial manager Phillip Ndlovu said: “We are already in negotiations to increase the CABS loan or facility to $1 million to improve working capital.”

He said the facility from CABS was directed at facilitating operational existence of the textile company and to purchase raw materials.
A huge fraction of the $500,000 loan that National Blankets secured, Ndlovu said had been used to procure raw materials for the last quarter and part of 2014.

Following the settlement of a $2,600,000 sale of Industrial Plot Number 39 to National Social Security Authority, the textile company has cleared a total of $1,944,035 it owed Capital.

Ndlovu said the restructuring of National Blankets balance sheet had yielded positive impact such as reducing the company’s exposure to risk from interest rate fluctuations on bank debts.

He added: “The assets reduced by $3 million while long-term liabilities reduced by $9 million. This will bring a positive impact on the organisation going forth, which creditors should benefit from through their improved status as shareholders.

“Current liabilities remain high at $2 million against current assets of $1,1 million. This position will need to be managed and attempts to reclassify the relevant creditors into long-term position are underway.”

He said the restructuring of the balance sheet also enhanced the firm’s ability to borrow funds as it would be having less debt than equity.
“Also having released the assets held as security against debt, has allowed the company to opt for loans as form of financing.”

Ndlovu said National Blankets, which still remains under judicial management despite having cleared the Capital Bank debt, requires about $4 million to remain afloat.

National Blankets was placed under judicial management last year.