Paramount Garments invests $2m in Archer Clothing

Oliver Kazunga Senior Business Reporter
PARAMOUNT Garments which is in the process of reviving Archer Clothing has so far invested about $2 million in the Bulawayo-based clothing manufacturing firm.
Early this year creditors voted to approve the Archer takeover by Paramount, a Harare clothing company, but the process was yet to be finalised after one of the 45 creditors voted against the acquisition.

Despite the stalemate Archer Clothing resumed operations in September employing 205 workers and increasing capacity utilisation from zero percent to 25 percent after the Paramount Garments investment.

The new investor has indicated plans to spend another $5 million on expanding its operations.
“So far we’ve committed an estimated $2 million to our investment. The refurbishment of the premises and machinery continues and we’re planning to employ more people in the near future,” said Paramount Garments managing director, Jeremy Youmans.

He added that any company that was operating at low levels of capacity utilisation will struggle to be competitive and viable.
“We’re continuing to rebuild Archer as quickly as we can, even given attempts to frustrate the process.

“Start-up costs absorb a significant amount of money as does the build-up of working capital and stocks, so any delays are very expensive and can derail investment plans,” he said.

Youmans said another creditors’ meeting has been approved by the High Court in Bulawayo early next month to allow for the further proof of claims and to vote on the offer from Paramount.

“The return date was extended by the High Court . . . so if the offer isn’t accepted, the company is likely to be liquidated,” he said.
Initially the High Court had set October 9, 2014 as the return date.

Youmans said if the takeover deal fails to materialise some of the investments Paramount Garments had made would be recovered in the increase in value to the assets.

“Most of the investments would be lost due to realisable value of assets. Wages, systems developments and general upgrades wouldn’t be recoverable,” he said.